Wednesday, January 05, 2011

All quiet on the Western Front - New Rules for Employee Inventions in France

Many of you may already know that in France, we take things seriously when it comes to paying employee inventors for their contributions to increasing the wealth of their employers intangible assets. Yes, we have laws, decrees, ordinances, and case law to weed out those bad employers who, dare I mention it, still consider that an employee gets all the just rewards they deserve from the salary that their employers so generously (or not so generously) pay them for inventing. Yet somehow, nobody really seemed to be satisfied with the current trend of having to pay an employee inventor an extra sum corresponding to the case law derived percentage of the profits that the (direct or indirect) exploitation of an invention might procure. As mentioned in a previous post, the current state of affairs in France was / is, to put it simply, a bit of a mess. Thus it came to pass that discussions ensued as to how to best evolve current legislation into something seen to be more in line with today's expectations of a modern employee / employer relationship in matters patent related.

The usual suspects were involved :
- the unions, and left-wing political parties, disgruntled as ever at anything that might be considered loss of privileges for the working masses, battled for more recognition from within the law itself;
- the employers confederations, MEDEF and CGPME to name but two, as usual, spouting over-zealous government intervention at any hint of new legislation that would force companies into a legislative prison from which there would be no escape;
- the government, under pressure to be seen to foster innovation and provide a suitable environment for industry to prosper, and for France to be said to be leading the way once again at the top of the R&D league table, in which it has slipped to somewhere between 10th and 15th place worldwide (depending on the source, one of which is given here).

Out of this thorny battle of ideologies, political bravado, wit and ideas has come the following text, which has just been passed by the French Senate, and is now awaiting a second reading by the French Assembly :

Article L.611-7 : If the inventor is an employee, the right to the industrial property title, unless otherwise specified more favorably towards the employee through contractual obligations, is defined hereafter :

1) Employee inventions shall be classed as "work" ("service") inventions or "non-work" ("non-service") inventions.

2) Work inventions shall be those inventions made by the employee :
- either during execution of the employee's work contract which contains a mission to invent corresponding to the employee's effective functions ;
- or during execution of the employee's functions ;
- or falling within the activities of the business of the employer ;
- or through knowledge or use of techniques or means specific to the business of the employer, or data obtained by the latter.

Work inventions shall belong to the employer.

3) All other inventions shall be deemed "non-work" inventions and belong to the employee.

4) Work inventions, as defined in paragraph 2, will give rise, if patentable, to the payment of supplementary remuneration to the benefit of the employee, author of the invention.

Collective bargaining agreements, company agreements and individual work contracts will determine the conditions under which the payment of such supplementary remuneration will occur.

(In the elaboration, construction, drafting, negotiation, interpretation of these agreements or contracts)  - unfortunately this first bit is missing from the current proposal, hence the author's brackets - Due consideration will be made with regard to :
- the initial input of the employer and employee ;
- the industrial and commercial utility of the invention.

5) When an invention is made through the input of several employees, the supplementary remuneration is determined as a function of the respective contribution of each one to the invention. Unless otherwise stipulated, the share of supplementary remuneration shall be equally distributed among the employees. The employer shall inform the inventors of the share that each of them will receive.

6) An employee who is the author of an invention will inform his/her employer thereof, who will recognise such through the means and deadlines determined by the regulations.

The employee and employer will communicate to each other all useful information necessary to the invention in question. They will refrain from divulging anything likely to compromise all or part of the exercise of the rights conferred by the present Book (Editor's comment - Livre VI, or Book 6 of the French Intellectual Property Code dealing with inventions).

Any agreement between the employee and its employer relating to an employee invention must be made in writing, failing which it will be null and void.

7) The modalities of application of the present article are laid down in a Decree of the State Council.

8) The stipulations of the present article are also applicable to agents of the State, public bodies, and any other moral persons falling under public law, according to the modalities laid down n a Decree of the State Council.

So where is the revolution / evolution in all of the above ? Well, there isn't a lot, funnily enough. With a conservative government having a fairly substantial majority in parliament, one can notice the deft hand of the business sector lobby groups in the way the law has been reformulated in rather wishy-washy terms. The biggest noticeable difference is the reduction in the number of groups of employee inventions from 3 down to 2, a simplification which I personally feel is more the result of having to address the underlying fiscal and national insurance contribution system problems that were proeminent in the current regime of inventions that could be "acquired by" or "attributed to" the employer. This truly was a nightmare for everyone, both employee and employer alike, not to mention HR, accounts and auditors, and only added confusion to an area of employee / employer relations that are at the best permanently strained in France. The one fell swoop definition of a "service invention" or "work invention" now allows everyone to avoid the issue completely, much to the chagrin, no doubt, of the collecting agencies who were starting to rub their hands in glee at all the prospective ways of grabbing yet more money from companies and/or employees who happened to have the misfortune to invent something of use to their employer without being asked to do so.

Something this proposal has not done is to avoid the confusion that springs to mind when one reads the words "author of an invention". The French IP Code, being a bundle of disparate of existing laws when it was codified in 1990, really could do with a clean up here to avoid the mixing of genres and maintaining a harmonised approach to IP across the board. However, as usual, it appears that no one has seen fit to do so, most probably because terms like "author" in relation to an invention are potentially too hot a potato for any government to touch given that it probably goes back to the first Napoleonic codes from 1844 or thereabouts.

Ultimately, the proposed text is still wishy-washy : it carefully avoids making things more difficult for businesses by imposing set conditions for remuneration of employee inventions, and I would even say is positively pro-business in the amalgamation of the current "invention de mission" and "invention hors mission attribuable" categories of inventions. At least with the current system, employees had some kind of bargaining chip, but the practical realities of these latter situations were not easy to handle for anyone, and in a lot of cases could lead to a state of stalemate between the employer and the employee where the invention could not be used by the employer without paying the "fair price" to the employee, and where the employee could not, or only with great difficulty, conceive of exploiting an invention for which the employer was not prepared to pay, through other channels which were likely to put him / her at risk of breach of employment contract with the employer. To this extent then, the simplification into just 2 categories is to be praised.

Another pointer to business lobbying can be seen in the criteria to be taken into account for evaluating the supplementary remuneration - the majority of these criteria seem to lie squarely within the sphere of the how the employer will see and appreciate the invention, the only place where the employee gets a say is with respect to his / her own contribution, and even that will be biased by the employer. Based on personal experience within an industrial corporation, I know that pressure, arguments, etc,  will be brought to bear on the employee to accept something less than what he / she feels is the true worth or contribution of their invention to the company.

All in all, I get an overall feeling of dissatisfaction with the proposed text, like a fizzled out firework that has failed to go off, or rather shoot spectacularly into the sky and then just sputter, but that wouldn't be the first time with regard to the French legislation making process - having been here for 18 years now, I'm rather getting used to it..."same old, same old..."

As for the rest, well I guess we'll just have to wait and see how things evolve on the ground, assuming of course, the proposal is voted at second reading in its current state, but for me, this text does not attain the objective of legal security for the stakeholders, nor does it reach for the stars as it was originally billed to do. So when is the attack coming ? Not yet - all quiet on the western front, I'm afraid.