Abstract
The number of intellectual property cases that include cross-border elements is growing due to rapidly evolving technologies and advancing globalization. The free movement of workers in research and development also leads to numerous international private law issues, especially in situations where employees are hired to produce new inventions. Since it is necessary to consider private international law issues related to the cross-border production of new inventions more frequently than in the past, we have to clarify if the law applicable to employment contracts concluded with the inventors also governs the issues related to intellectual property protection. This paper focuses on the law applicable to employee inventions, especially to the right to a patent, and aims to show how the boundaries between the scope of application of the employment statute (lex contractus) and the so-called intellectual property statute (lex loci protectionis) are set in the Czech private international law. We will argue that the employment statute is an obligation statute and, therefore, can only be applied to the relationship between the contractual parties (the employee and the employer). Any issues that concern erga omnes rights are, in principle, excluded from the employment statute. In this paper, we defend the thesis that the closest connecting factor subsists in the intellectual property regime, not in the legal regime of the employment contract agreed upon by the parties.
This paper was written within the project and with the financial support of the Grant Agency of the Czech Republic, No. GA17-19923S, “Private International Law and Intellectual Property Rights – Law Applicable.”
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Notes
- 1.
Intellectual property law usually covers two main areas: copyright and rights related to copyright, and industrial property rights. In this paper, we will focus only on industrial property rights to inventions and we will discuss situations where inventions are achieved in the course of employment. We will leave aside the issue of copyrighted works created by employees, even though we know that the original ownership of copyright is of the same importance as our topic and that, especially in German legal theory, there have been expressed different opinions on the law applicable to this question. See mainly Ulmer (1975), p. 43; Schack (1979), p. 66 ff.; Schack (2013), pp. 499–500; Drexl (2018), p. 1277 ff.; Beckstein (2010), p. 309.
- 2.
Due to the potential ubiquity of intangible assets and ease of the file sharing on the Internet, copyright infringements occur very often. Cross-border infringements of trademarks are a significant problem as well. See decisions of the CJEU in Cases C-523/10, Wintersteiger AG v. Products 4U Sondermaschinenbau GmbH, EU:C:2012:220 (CJEU, April 19, 2012); C-441/13, Pez Hejduk v EnergieAgentur.NRW GmbH, EU:C:2015:28 (CJEU, January 22, 2015), hereinafter “Pez Hejduk”; C-170/12, Peter Pinckney v KDG Mediatech AG, EU:C:2013:635 (CJEU, October 3, 2013), hereinafter “Pinckney”. Analyses of international private law issues on the Internet is the subject of several publications. Cf. Beckstein (2010), p. 141 ff.; Trimble (2015), p. 339 ff.; Gössl (2014), p. 55 ff.; Kunda (2016), p. 454; Drexl (2018), pp. 1320–1337.
- 3.
Troller (1983), p. 55; Götting (2006), p. 356; Rehbinder and Peukert (2015), pp. 2, 28. This issue has been analyzed also by Czech and Slovak scholars. See Knap and Kunz (1981), pp. 16, 304; Knap et al. (1994), p. 12; Adamová (2016), p. 253; Vojčík (2014), pp. 21–23; Kyselovská and Koukal (2019), p. 71 ff.
- 4.
- 5.
In this paper, we will not consider tort law issues which are regulated by Art. 8 Rome II Regulation [Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations]. This provision also contains the connecting factor of lex loci protectionis, but it does apply only to tort obligations. Sec. 80 Czech Private International Law Act has a broader scope and applies to a wider category of legal issues. In our paper, we will also not address the issue of jurisdiction in cross-border disputes over IPRs to employee inventions. For this issue, see e.g. Ubertazzi (2012a) Exclusive jurisdiction in intellectual property; Ubertazzi (2012b), Infringement and Exclusive Jurisdiction in Intellectual Property: a Comparison for the International Law Association, pp. 227–262; Kono and Jurčys (2012), p. 19 ff.; Jurčys (2012), pp. 174–226. The ECJ addressed the jurisdiction in employee inventions disputes in a decision Duijnstee [Case C-288/82, Ferdinand M.J.J. Duijnstee v Lodewijk Goderbauer, EU:C:1983:326 (ECJ, November 15, 1983)]. Here, the Court dealt with the interpretation of the term of ‘proceedings for the registration or validity of patents’, which is nowadays contained in Art. 24 (4) Brussels I bis Regulation [Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters]. The Court concluded that this term did not cover a dispute between an employee and employer about the question of who is the owner or applicant for a patent, if the dispute’s subject-matter is the ownership of respective rights in that patent arising from the employment contract.
- 6.
Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I).
- 7.
Act No. 91/2012 Coll., on Private International Law [online].
- 8.
Bundesgesetz über das Internationale Privatrecht (IPRG) vom 18. Dezember 1987 (Stand am 1. Januar 2019) [online].
- 9.
Unlike Art. 122 (3) Swiss PILA, and Sec. 34 (2) Austrian Private International Law Act, the Czech PILA contains no special provision in respect of employees’ works or inventions. Therefore, issues related to the ownership of rights are considered according to the lex loci protectionis.
- 10.
- 11.
However, this issue is solved by comparative academic projects, which deal with cross-border aspects of intellectual property rights. See § 315 (1) ALI Principles; Art. 3:201, Art. 3:501 CLIP Principles, Art. 307 and Art. 308 Joint Proposal Drafted by Members of the Private International Law Association of Korea and Japan; Art. 305, Art. 306 Transparency Proposal; Art. 19-23 ILA Guidelines. For a comparison of these academic projects, see Matulionytė (2011), pp. 25 ff, 220 ff; Matulionytė (2012), p. 268 ff. Concerning the jurisdiction in intellectual property cross-border disputes, see mainly Ubertazzi (2012b), Infringement and Exclusive Jurisdiction in Intellectual Property: a Comparison for the International Law Association, p. 227 ff.; Ubertazzi (2012a) Exclusive jurisdiction in intellectual property, p. 180 ff.; Jurčys (2012), p. 174 ff.
- 12.
- 13.
United Nations Convention of 11 April 1980 on Contracts for the International Sale of Goods [online]. United Nations Commission on International Trade Law (UNCITRAL).
- 14.
- 15.
- 16.
Act No. 527/1990 Coll., on Inventions and Rationalisation Proposals, as amended [online].
- 17.
Patentgesetz in der Fassung der Bekanntmachung vom 16. Dezember 1980 (BGBl. 1981 I S. 1), das zuletzt durch Artikel 4 des Gesetzes vom 8. Oktober 2017 (BGBl. I S. 3546) geändert worden ist [online].
- 18.
Gesetz über Arbeitnehmererfindungen in der im Bundesgesetzblatt Teil III, Gliederungsnummer 422-1, veröffentlichten bereinigten Fassung, das zuletzt durch Artikel 7 des Gesetzes vom 31. Juli 2009 (BGBl. I S. 2521) geändert worden ist [online].
- 19.
Convention on the Grant of European Patents (European Patent Convention) of 5 October 1973 as revised by the Act revising Article 63 EPC of 17 December 1991 and the Act revising the EPC of 29 November 2000 [online].
- 20.
- 21.
It has not been clarified yet if the rule in Art. 60 (1) EPC permits renvoi or not since EPC itself does not explicitly regulate this issue. Nevertheless, it appears from the structure and the purpose of EPC that it does not provide for that. See Matanovac Vučković and Kunda (2011), p. 109; Kunda (2016), p. 468; Fawcett and Torremans (2011), p. 739; Metzger (2012), p. 597; Drexl (2018), p. 1342.
- 22.
Drexl (2018), p. 1342.
- 23.
- 24.
Ulmer (1975), p. 80.
- 25.
Drexl (2018), p. 1341.
- 26.
Nishitani (2009), p. 74; Martiny (2018), p. 361. For a discussion of the lex contractus and its scope, see also Rüve (2009), p. 25 ff. Regarding academic projects, see Art. 3:201 (3), Art. 3:503 CLIP Principles; Art. 308 (4) Joint Proposal Drafted by Members of the Private International Law Association of Korea and Japan; Art. 23 (1) ILA Guidelines. The ALI Principles do not contain a specific conflict-of-law rule governing employment contracts either. However, this issue is addressed by the question of the initial ownership which is regulated by the employment relationship. See Metzger (2010), p. 169; Heinze (2013), p. 286.
- 27.
In contrast, Art. 20 Czech PILA, provides that the qualification should primarily be carried out according to lex fori [Art. 20 (1)]. The so-called functional classification [Art. 20 (2)] might be the second option, where the issue is classified regarding its function in the national legal system. Paragraph 3 of the Art. 20 enables the lex causae classification. Art. 20 (4) explicitly establishes that the connecting factors within Czech PILA has to be qualified according to Czech law (i.e., lex fori). Pauknerová et al. (2013), p. 141 ff.; Rozehnalová et al. (2015), p. 74; Bříza (2014), p. 129 ff.
- 28.
- 29.
- 30.
- 31.
- 32.
The right to a patent (Sec. 8 Czech Patent Act) is a proprietary right that is transferable. On the other hand, the moral (personal) right to an invention is the right of a moral (personal) nature and is not transferable. Czech Patent Act, like the German Patentgesetz, grants both the rights to the inventor due to the application of the creative principle (Schöpferprinzip). Chloupek et al. (2017), pp. 55–59. While the typical results of the average work belong to the employer, this approach does not apply to creative results. Due to their personal nature, they belong to their creator, although they were created in the course of employment. On the other hand, the employer acquires ownership of the patterns, models, and drawings produced by an employee as well as ownership of the paper documents, data carriers, handicraft objects produced by employed artists or inventors. In this respect, the acquisition of rights to tangible and intangible assets is fundamentally different. The transferability of intellectual property rights, in general, is recognized as one of the questions covered by lex loci protectionis, also in the academic projects. Regarding transferability of intellectual property see Art. 3:301 CLIP Principles; Art. 309 Joint Proposal Drafted by Members of the Private International Law Association of Korea and Japan; Sec. 314 ALI Principles; Art. 305 Transparency Proposal; Art. 19 ILA Guidelines.
- 33.
Chloupek et al. (2017), p. 77.
- 34.
There were no essential changes between Art. 8 Rome I Regulation and the former Art. 6 Rome Convention. For the minor differences between Rome I Regulation and Rome Convention concerning individual employment contracts, see Mankowski (2009), p. 174 ff.; Staudinger (2015), p. 295; Martiny (2018), p. 328.
- 35.
- 36.
However, there is a significant difference between national mandatory provisions of a State, in which or from which the employee habitually carries out his/her work in the performance of the contract [Art. 8 (2) Rome I Regulation], and overriding, i.e. internationally mandatory, provisions established in Art. 9 Rome I Regulation. The law applicable according to Art. 8, Paragraphs 2–4 Rome I Regulation sets the minimum standard of protection for the employee. In addition to the law chosen, the mandatory provisions of the objective employment contract statute also apply. See Mankowski (2009), p. 184; Staudinger (2015), p. 298.
- 37.
Staudinger (2015), p. 289.
- 38.
- 39.
Heinze (2013), p. 281.
- 40.
- 41.
Straus (1984), p. 2; Rüve (2009), p. 122; Fawcett and Torremans (2011), p. 731; Martiny (2018), p. 361. Kunda declares that, for example, the initial ownership of intellectual property rights is expressly linked to the employment statute in some Eastern European countries like Bulgaria, Montenegro, or Lithuania. Kunda (2016), p. 467. See also Art. 3:201 (3), Art. 3:503 CLIP Principles; Art. 308 (4) Joint Proposal Drafted by Members of the Private International Law Association of Korea and Japan; Art. 23 (1) ILA Guidelines.
- 42.
In the majority of academic projects, the conflict between the contractual freedom and the protection of the employee’s interests is resolved in such a way that while the parties can choose the applicable law, such choice cannot deprive the employee of the protection afforded to him/her by mandatory provisions of the applicable law that would have been applied in the absence of the choice of law [Art. 3:503 CLIP Principles; Art. 23 (1) ILA Guidelines]. See also Metzger (2010), p. 169; Kono and Jurčys (2012), p. 182; Heinze (2013), p. 284 ff.; Matulionytė (2011), p. 210 ff.
- 43.
- 44.
- 45.
Mankowski (2009), p. 209.
- 46.
- 47.
In areas that are not covered by any bilateral or multilateral international conventions the national rules apply. In the Czech Republic, the relevant conflict-of-law rules are provided for in Sec. 29 ff. Czech PILA (legal personality and capacity) and Sec. 69 ff. Czech PILA (rights in rem). See Rozehnalová et al. (2015), pp. 87, 180.
- 48.
Martiny (2018), p. 359.
- 49.
- 50.
As an employee invention we should consider every invention created as a result of an employee’s inventive work which he/she has completed in the course of their employment. From the perspective of the patent protection it is crucial that an invention can be made by a person skilled in the art (Sec. 6 Czech Patent Act) without any further inventive considerations. However, it does not have to be ready for the production. The time of the registration of patent rights is also irrelevant. As for the temporal scope, the employment contract’s legal status, and not the actual activity of the employee, is decisive. Therefore, it does not collide with the status of the employees’ inventions if the invention was made in his/her leisure time, on vacation, during an illness, or during a strike.
- 51.
Chloupek et al. (2017), p. 62 ff.
- 52.
- 53.
Martiny (2018), p. 156; Rozehnalová et al. (2015), p. 177 ff. The general rule of Sec. 69 (1) Czech PILA also applies to movable things. However, Sec. 70 regulates some additional exceptions to the lex rei sitae principle. Above all, if we transfer the ownership to movable assets upon a contract, Sec. 70 (2) rules that formation/termination of the ownership is governed by the law applicable to the contract (i.e. lex causae). Sec. 70 (1) Czech PILA then regulates the so-called mobile conflicts, i.e. it reflects the fact that the location of movable assets regularly changes in time. Sec. 70 (3) deals with the formation/termination of rights in rem to movable assets which are already subject to transport at the time of the formation/termination of those rights. See Rozehnalová et al. (2015), pp. 181–183.
- 54.
The principle of territoriality traditionally applies to intellectual property rights and is accepted almost in all jurisdictions. Concerning the Czech and Slovak jurisdictions, see: Knap and Kunz (1981), p. 17 ff.; Knap et al. (1988), p. 19; Kučera et al. (2015), p. 270; Adamová (2016), p. 256; Telec (2017), p. 38. As for the German and Swiss jurisdictions, see: Troller (1952), p. 48; Schack (1979), p. 20; Troller (1983), p. 135; Ulmer (1975), p. 9; Götting (2006), p. 358; Beckstein (2010), p. 18 ff.; Jaeger (2013), p. 12; Drexl (2018), p. 1247 ff. As far as common-law jurisdictions are concerned, see: Pila and Torremans (2016), p. 29 ff.; Goldstein (2001), p. 63 ff.; Goldstein and Hugenholtz (2010), p. 95 ff.; Trimble (2015), pp. 339, 383–384. The principle of territoriality of the intellectual property protection was also expressed in the CJEU case law: Cf. the judgments in Case C-192/04, Lagardère Active Broadcast v Société pour la perception de la rémunération équitable (SPRE) and Gesellschaft zur Verwertung von Leistungsschutzrechten mbH (GVL), EU:C:2005:475 (CJEU, July 4, 2005), para 46; Case C-9/93, IHT Internationale Heiztechnik GmbH and Uwe Danzinger v Ideal-Standard GmbH and Wabco Standard GmbH, EU:C:1994:261 (CJEU, June 22, 1994), para 22 (hereinafter “IHT Internationale Heiztechnik”); Pinckney, para 22; Pez Hejduk, para 22. The principle of territoriality can be limited in some situations. Under EU law, we can, for example, mention the exhaustion of rights, where the territoriality nature of intellectual property rights is balanced with the principle of free movement of goods [see Judgment of the ECJ in Case 24/67, Parke, Davis and Co. v Probel, Reese, Beintema-Interpharm and Centrafarm, EU:C:1968:11 (ECJ, February 29, 1968); Case 78/70, Deutsche Grammophon Gesellschaft mbH v Metro-SB-Großmärkte GmbH & Co. KG, EU:C:1971:59 (ECJ, June 8, 1971); Case 119/75, Terrapin (Overseas) Ltd. v. Terranova Industrie CA Kapferer & Co., EU:C:1976:94 (ECJ, June 22, 1976)]. Another example, where the territoriality principle can be overcome is the breach of EU unitary rights. In its judgment in “Nintendo/BigBen” case [Joined Cases C-24/16 and 25/16, Nintendo Co. Ltd v BigBen Interactive GmbH and BigBen Interactive SA, EU:C:2017:724 (CJEU, September 27, 2017)], the CJEU found that Art. 8 (2) Rome II Regulation as a special provision for non-contractual obligations arising from a violation of EU-wide intellectual property rights provides a specific connecting factor that deviates from the general principle of the lex loci damni provided for in Art. 4 (1) Rome II Regulation. The CJEU ruled that the criterion in Art. 8 (2) Rome II Regulation (state “in which the act of infringement was committed”) should be interpreted as including the state in which the event giving rise to the damage occurred, i.e., the state in which the infringement was committed (Nintendo/BigBen, para 98). The CJEU emphasized that unitary intellectual property rights are protected across the Union and that acts of infringement can be committed in the numerous Member States, making it difficult to predict which substantive law would apply to issues not regulated autonomously by the relevant Union instrument (Nintendo/BigBen, para 101). Furthermore, the CJEU pointed out that, according to recitals 6, 13, 14 and 16 Rome II Regulation, the predictability of the outcome of legal disputes, the certainty about the applicable law as well as the uniform application of the regulation should be guaranteed in all Member States. In view of these objectives, the CJEU found that in the case of multi-state violations, it is not necessary to rely on each individual act of harm in determining the event that caused the damage, but an overall appraisal of his behavior is to be determined in order to identify the place where the original tortious act, on which the infringing behavior is based, has been committed. Such an interpretation enables the courts in Member States to easily determine the applicable law on the basis of a uniform connection criterion (a place where the infringement was committed or is likely to result from several acts of which is a defendant accused of).
- 55.
Academic projects offer a different view on the closest connection and connect law applicable to the choice of law, which is limited by the application of mandatory rules. See Art. 3:503 CLIP Principles; Art. 23 (1) ILA Guidelines. The ALI refers to the law of the closest connection (Sec. 315 ALI Principles). The Transparency Proposal includes the rule of law-of-the-closer-connection, extensively for the question of transfer and licensing contracts (Art. 306 Transparency Proposal). However, we believe that in the Czech private international law system, it is not possible to prioritize a choice of law that, in principle, conflicts with the absolute nature of the right to the invention and the right to a patent, without the express provision of the legislator.
- 56.
- 57.
Drexl (2018), p. 1247. On the other hand, the so-called principle of universality is based on natural law presumptions and expresses that at the moment of the creation of a work/invention, an absolute right with worldwide effects arises for the person of the author/inventor, which is only recognized by other legal systems. Schack (1979), p. 23. See also Fawcett and Torremans (2011), p. 273.
- 58.
- 59.
Based on the employer’s claim, the employer acquires all economic exploitation rights to the employee’s invention. He/she becomes the employee’s successor under intellectual property law; he/she may submit the application of the invention for patent protection and use the invention. However, the non-transferable inventor’s moral (personality) rights (right to be designated as the inventor) always remain with the employees.
- 60.
If there was a specific rule in the Czech private international law that contain some legal systems (Switzerland, Austria) or that we find in the abovementioned academic projects, the situation would be different. However, we still consider that the legal order, which is most closely linked to the right to an invention and the right to a patent, is the lex loci protectionis, not the lex laboris or the lex contractus. The reason for this conclusion is primarily the absolute nature of these rights. Similar conclusions were also expressed by Spanish or Greek scholars. See Kono and Jurčys (2012), p. 183.
- 61.
Martiny (2018), p. 361. Rüve concludes that the respective national patent rights thus apply to the patentability issues and territorial effects of the patent protection. However, they are not necessarily fixed with the assignment of the right to the invention or the right to the patent since the right to the invention arises informally and independently of a State administrative act. Thus, the inventor initially obtains the right to the patent for all countries, and the territoriality principle does not apply. Under the maxim that the protection should be “fair, cheap, expedient,” the fragmentation of the right to the patent to the rights of numerous protected countries should be expediently denied. Rüve (2009), p. 50. A compromise between Martiny’s conclusions and the proponents of lex loci protectionis can be found in the judgment of the OLG Karlsruhe in the Rohrleitungsprüfung case (OLG Karlsruhe, decision from 13th April 2018, file No. 6 U 161/16). Here the court concluded that the issue of employee inventions falls under the scope of Article 8 of the Rome I Regulation. However, the issue of the vindication of the right to a patent is already a matter of the application of the lex loci protectionis.
- 62.
- 63.
- 64.
Knap and Kunz (1981), p. 18.
- 65.
- 66.
- 67.
Drexl (2018), p. 1277, 1279.
- 68.
In the German legal theory, see Drexl (2018), p. 1340. Similar conclusions were expressed also by other scholars. Cf. Fawcett and Torremans (2011), p. 728; Kunda (2016), p. 455; Kono and Jurčys (2012), pp. 139–140. Kyselovská and Koukal (2019), p. 156 ff. A similar approach can also be found in Spanish [De Miguel Asensio (2012), p. 1014] or Greek law [Grammaticaki-Alexiou and Synodinou (2012), p. 631].
- 69.
- 70.
See Martiny (2018), p. 361.
- 71.
The decision of the OLG Karlsruhe from April 13, 2018, file No. 6 U 161/16.
- 72.
It is questionable that the legal order, which is more closely connected with the transfer of the right to a patent for the Czech Republic territory, would be the legal order of the Federal Republic of Germany while using mandatory provisions of the Kingdom of Cambodia (lex loci laboris). This solution would, however, correspond, for example, to Art. 3:503 (1) of the CLIP Principles, or Art. 23 (1) (2) ILA Guidelines.
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Koukal, P., Kyselovská, T., Vlachová, Z. (2021). Employment Contracts and the Law Applicable to the Right to a Patent: Czech Considerations. In: Meškić, Z., Kunda, I., Popović, D.V., Omerović, E. (eds) Balkan Yearbook of European and International Law 2020. Balkan Yearbook of European and International Law, vol 2020. Springer, Cham. https://doi.org/10.1007/16247_2020_18
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