Inventions Within the Scope of the Employment Contract

The Labor Court, including the Superior Labor Court (“TST”), has a firm understanding that employees who develop an invention during the employment contract are entitled to half of the economic benefit obtained by the employer through creation. Along these lines, the Fifth Panel of the TST, in the records of AIRR nº 495 51.2014.5.17.0003, confirmed the right to remuneration of employees at half of the economic benefit obtained by the company as a result of the invention created by them during the course of the employment contract , in this case, equipment created by two former Vale SA technicians, which resulted in economic gains for the company.

In this specific case, Vale SA employees developed equipment that resulted in “an undeniable benefit for Vale”. As the employees were not specifically hired to perform any inventive activity and the right to exploit the equipment was exclusive to the company, the TST understood that the intellectual property of the invention is jointly owned, in equal parts, by the employee and the employer and, therefore, the inventor employee is entitled to fair remuneration on the economic benefit of the invention.

The intellectual property right over an employee's invention during the course of the employment contract must be assessed in light of the respective articles 88 to 91 of Law No. 9,279 of 1999, the so-called Industrial Property Law ("LPI"), as well as the art. 454 of the Consolidation of Labor Laws (“CLT”). When analyzing these articles, it is possible to formulate three situations, which vary according to the nature of the employment contract between the parties: the invention belongs (i) exclusively to the employer; (ii) exclusively to the employee; or (iii) ownership of the invention is common, in equal parts, to the employee and employer.

The last hypothesis, which interests us most here, is the one in which the employee developed or contributed to the development of an invention, within the work environment and using the employer's facilities, data, materials or equipment, but was not specifically hired to perform any inventive step. For these employees, art. 91 of the LPI establishes that the ownership of an invention or utility model will be due, in equal parts, to the employee and employer. The employer is, however, guaranteed the right to an exclusive license to exploit the invention, however, the employee will be assured a “fair remuneration”. 

It is important to point out that the exploitation of the industrial property object of the invention, unless otherwise provided in the contract, will be up to the employer, who will have a period of 1 (one) year, counted from the date of granting the patent or the utility model, to start its exploitation, under penalty of ownership of the patent or utility model becomes 100% of the employee. Hypotheses of lack of exploitation for legitimate reasons are safeguarded.

It follows from this that the ownership of industrial property resulting from the personal contribution of a non-hired employee to the development function will always be shared fifty-fifty, however the employer will have the right to obtain an exclusive license from the employee, as long as it guarantees the his fair remuneration. That is, in any case, the employer is not exempt from remunerating the employee for exploiting the invention.

Jurisprudence has understood that, starting from the premise that the invention belongs, in equal parts, to both the employee and the employer, the "fair remuneration" would correspond to 50% (fifty percent) of the advantages obtained with its exploitation.

Therefore, in summary, employees who were not specifically hired to perform an inventive activity and who created an invention during their employment contract are entitled to share ownership of the invention and, according to jurisprudence, to half of the economic benefit obtained through it.

Thus, it is of paramount importance that both employees and employers pay attention to the legislation in force and contractually determine the form of exploitation and the terms of remuneration for the invention, so that the rights of both parties are preserved.

Our Labor and Intellectual Property, Innovation and Technology teams are available to assist you in this matter.