Sibel Öztürk, LL.M., Attorney-at-Law | Selenay Esen, Trainee Lawyer
Introduction
As technological developments and research and development (R&D) activities become increasingly important to the competitiveness of businesses, the legal classification of inventions made in the course of employment and the determination of ownership rights in such inventions have gained considerable significance. In particular, inventions developed through employees’ technical knowledge and expertise in the technology, software, pharmaceutical, defence and manufacturing sectors may constitute substantial economic assets for businesses.
However, the fact that an invention has been developed during employment using the technical and financial resources provided by the employer does not automatically confer ownership of the patent rights upon the employer. Equally, the fact that an invention has been made by an employee does not prevent the employer from acquiring rights in that invention.
Turkish Industrial Property Law No. 6769 (the “IPL”) establishes a specific legal framework for employee inventions, seeking to balance the protection of employers’ technological investments with the safeguarding of employees’ rights in their inventions. Within this framework, the legal classification of an invention, the procedure by which an employer claims rights in it, the obligations relating to patent applications and the employee’s entitlement to remuneration are closely connected, yet give rise to distinct legal consequences.
In practice, disputes primarily concern whether an invention qualifies as a service invention or a free invention, whether the employer has asserted its rights within the prescribed statutory periods, how the remuneration payable to the employee should be determined, and the extent of the parties’ respective rights following the termination of employment.
This article examines ownership of patent rights in employee inventions, the legal consequences of employers’ claims to such rights, employees’ entitlement to remuneration and disputes arising following the termination of employment, with reference to the applicable statutory provisions and issues encountered in practice.
I. Legal Classification of Employee Inventions and Determination of Ownership
Determining ownership of patent rights in employee inventions requires, as a preliminary matter, an assessment of whether the invention constitutes a service invention or a free invention.
Pursuant to Article 113 of the IPL, a service invention is an invention made by an employee during the employment relationship, either in the performance of duties undertaken within a business or public institution, or substantially on the basis of the experience and activities of that business or institution. Employee inventions that do not fall within this definition are classified as free inventions.
Although the employee’s job description is relevant to determining whether an invention qualifies as a service invention, it is not, in itself, conclusive. The circumstances surrounding the development of the invention, the extent to which the employer’s technical knowledge was utilised, the R&D infrastructure employed, the business’s previous activities and the contributions made to the development of the invention must be assessed collectively.
Accordingly, the fact that an employee completes an invention outside normal working hours does not necessarily mean that the invention qualifies as a free invention. Similarly, an employee’s involvement in R&D activities does not automatically mean that every invention made during the employment relationship constitutes a service invention.
The decisive consideration is whether the requisite connection exists between the invention, the employment relationship and the technical activities of the business, as prescribed by the IPL.
In the case of free inventions, ownership generally remains with the employee. Nevertheless, Article 119 of the IPL imposes certain notification and offer obligations in respect of free inventions made during the employment relationship.
An employee is required to notify the employer without delay of a free invention made during employment. However, no such notification is required where it is evident that the invention cannot be exploited within the employer’s field of activity. The employer may object in writing to the classification of the invention as a free invention within three months of receiving the notification.
Where the invention falls within the business’s field of activity, or the business has undertaken serious preparations to operate in the relevant field, the employee must, before otherwise exploiting the invention, offer the employer an opportunity to use it on appropriate terms.
This obligation does not, however, automatically confer ownership rights in the invention upon the employer. The distinction between service inventions and free inventions is therefore not merely conceptual; it is a legal determination that directly affects entitlement to apply for patent protection and the respective economic rights of the parties.
II. The Employer’s Claim to Rights and the Transfer of Patent Rights
The existence of a service invention does not automatically result in the transfer of rights in the invention to the employer. The employer’s acquisition of such rights depends on compliance with the notification and rights-claiming procedures prescribed by the IPL.
Under Article 114 of the IPL, an employee must notify the employer of a service invention without delay and in writing. The notification must describe the technical problem that the invention seeks to address, the solution developed, the process through which the invention was made and, where applicable, the contributions of other employees.
The employer is required to acknowledge in writing the date on which the notification was received. Where the notification is incomplete, the employer may request that the deficiencies be remedied within two months.
At this stage, particular importance attaches to the requirement that the employer assert its rights within the statutory period and in accordance with the prescribed formalities.
Pursuant to Article 115 of the IPL, an employer may claim full or partial rights in a service invention within four months of receiving the employee’s notification. The claim must be communicated to the employee in writing.
Where the employer claims full rights, the rights in the invention are transferred to the employer upon receipt of the relevant notification by the employee. The employer thereby acquires the rights relating to patent protection and commercial exploitation of the invention, subject to the applicable statutory framework.
Where the employer claims partial rights, the invention acquires the status of a free invention, while the employer retains a right to use the invention within the scope prescribed by law. If the employer’s exercise of this right substantially impedes the employee’s ability to exploit the invention, the employee may request that the employer either acquire full rights in the invention or relinquish its right of use.
If the employer fails to respond to that request within two months, the right of use arising from the partial claim ceases.
Furthermore, where the employer does not assert any claim within the four-month statutory period, or expressly notifies the employee that no rights are claimed, the service invention acquires the status of a free invention.
The practical significance of these provisions is particularly evident in relation to inventions developed through businesses’ R&D activities. An employer’s ability to acquire rights in an invention to which substantial technical and financial resources have been devoted depends not only on those investments but also on proper compliance with the statutory procedure.
Accordingly, maintaining records of invention notifications, assessing their contents and systematically monitoring the applicable deadlines are essential to the effective protection of a business’s industrial property rights.
III. Distinction Between Ownership of Patent Rights and Inventorship
Another important aspect of the legal framework governing employee inventions is the distinction between ownership of patent rights and inventorship.
Under Article 109 of the IPL, the right to apply for a patent belongs to the inventor or the inventor’s successors in title, and that right may be transferred. Accordingly, where an employer claims full rights in a service invention, the economic rights relating to the invention pass to the employer.
However, the employer’s acquisition of such rights does not alter the fact that the invention was made by the employee. The right to be identified as the inventor belongs to the person who actually made the inventive technical contribution.
This distinction is particularly important where an invention has been developed through the contributions of several employees. Participation in an R&D project does not, in itself, establish inventorship. Determining inventorship requires an assessment of the actual contribution made to the technical solution constituting the subject matter of the patent.
Furthermore, an employer’s claim to full rights gives rise to obligations concerning the filing of a patent application.
Pursuant to Article 116 of the IPL, an employer that has claimed full rights is, as a general rule, required to file the initial patent application with the Turkish Patent and Trademark Office. Nevertheless, the IPL also contains specific provisions allowing an employer, in certain circumstances, to refrain from filing an application where justified by the interests of the business.
In this context, the decision whether to seek patent protection or maintain an invention as a trade secret cannot be assessed solely as a matter of commercial strategy. The employer’s statutory obligations and the employee’s rights must also be taken into account.
Indeed, an employer’s decision not to file a patent application, or to protect an invention as a trade secret, does not automatically extinguish the employee’s statutory rights.
Effective patent portfolio management must therefore extend beyond filing and registration procedures to include the accurate identification of inventors and proper documentation of the legal basis upon which the employer has acquired rights.
IV. The Employee’s Entitlement to Remuneration and the Determination of Remuneration
One of the fundamental elements of the legal framework governing employee inventions is the employee’s entitlement to claim remuneration in consideration of the employer’s acquisition of rights in the invention.
Pursuant to Article 115 of the IPL, an employee may claim reasonable remuneration where the employer asserts full rights in a service invention. Where the employer claims partial rights, the employee becomes entitled to remuneration if the employer makes use of the invention.
In this context, a distinction must be drawn between the salary received by an employee under the employment contract and the remuneration that may be claimed in respect of an invention.
The fact that an employee works in R&D or receives a substantial salary under an employment contract does not, in itself, mean that the statutory entitlement to remuneration for an invention has been satisfied. Salary paid under an employment contract and remuneration attributable to the economic value generated for the employer by a particular invention have different legal bases.
Nevertheless, it would also be incorrect to conclude that an employee is automatically entitled to a fixed percentage of the company’s revenue in respect of every invention.
The Regulation on Employee Inventions, dated 29 September 2017, provides that the determination of remuneration must take into account factors including the economic value of the invention, the employee’s duties within the business and the employer’s contribution to the development of the invention.
The economic value of an invention may be determined using different methods depending on the circumstances of the case. Relevant considerations may include reductions in production costs, increases in production capacity, the introduction of new products to the market or revenue generated through licensing the invention to third parties.
However, the total economic benefit derived by a business from an invention is not equivalent to the remuneration payable to the employee. In addition to the invention’s economic value, the calculation must take into account the employee’s duties and responsibilities and the employer’s contribution to its development.
The Regulation establishes a remuneration calculation framework that takes these considerations into account and classifies inventions into specified groups. Accordingly, determining remuneration involves not merely assessing the economic value of a patent but also evaluating the respective contributions of the parties to the development of the invention.
Furthermore, Article 7 of the Regulation provides for an incentive award, separate from the remuneration payable for the invention, where an employer claims full rights. This provision applies to employees other than those employed by public institutions and organisations. The incentive award must not be less than the net minimum wage.
The limits of contractual freedom are also significant in relation to employees’ entitlement to remuneration.
Article 117 of the IPL restricts contractual provisions that derogate from the statutory framework to the detriment of employees and provides for the invalidity of agreements that are substantially inequitable.
Consequently, the validity of broadly drafted provisions in employment contracts concerning the assignment of invention rights, waivers of remuneration or stipulations that salary encompasses all rights in future inventions must be assessed in light of the nature of the particular invention and the statutory protections afforded to employees.
Particularly in businesses engaged in substantial R&D activities, establishing remuneration policies for employee inventions in advance and implementing those policies in compliance with the applicable legislation can play an important role in preventing future disputes.
V. Protection of Patent Rights Following Termination of Employment
Rights and obligations arising from employee inventions do not automatically cease upon termination of the employment relationship.
Under Article 118 of the IPL, termination of employment does not affect the rights and obligations relating to employee inventions. Accordingly, patent rights lawfully acquired by the employer remain protected, while the employee does not lose the statutory entitlement to remuneration merely because the employment relationship has ended.
Nevertheless, the fact that a former employee engages in activities within the same sector, joins a competing business or undertakes work in a similar technological field does not, in itself, constitute patent infringement.
Determining whether patent infringement has occurred requires a comparison between the scope of protection conferred by the patent and the technical characteristics of the allegedly infringing product or process.
It is therefore necessary to distinguish between the development of a different technical solution addressing the same technological need and the unauthorised use of technical features falling within the scope of patent protection.
Where patent rights are infringed, Articles 141 et seq. of the IPL provide a legal basis for claims seeking a declaration of infringement, cessation and prevention of infringing acts and, where the relevant requirements are satisfied, compensation for pecuniary or non-pecuniary damage.
By contrast, the unlawful use of trade secrets acquired during employment or the breach of a valid post-employment non-compete obligation requires a legal assessment distinct from that applicable to patent infringement.
In this regard, the provisions of the Turkish Commercial Code concerning unfair competition and Articles 444 et seq. of the Turkish Code of Obligations governing non-compete obligations may apply depending on the particular circumstances.
It should be emphasised that although patent protection, trade secret protection and contractual non-compete obligations may serve related protective purposes, they are subject to different legal requirements. It is therefore necessary to identify separately which legally protected right has allegedly been infringed, by which conduct and in what manner.
VI. Resolution of Disputes Arising from Employee Inventions
The appropriate legal procedure for resolving disputes concerning employee inventions depends on the nature of the claim asserted.
The Regulation on Employee Inventions contains specific provisions governing disputes concerning the amount and method of payment of remuneration.
Under Article 24 of the Regulation, where the parties fail to reach an agreement on the amount and method of payment of remuneration within two months of the grant of a patent or utility model in cases involving a claim to full rights, or within two months of the employer commencing use of the invention in cases involving a claim to partial rights, the dispute is to be resolved through arbitration.
For disputes falling within this framework, the Regulation does not require the parties to enter into a separate written arbitration agreement. The parties may also pursue mediation before commencing arbitration proceedings.
However, not all disputes concerning employee inventions are of the same legal nature.
Claims concerning the determination of ownership of an invention, patent infringement, remuneration for an invention or other obligations arising under an employment contract may be subject to different substantive legal provisions and procedural rules.
Accordingly, the nature of the claim must first be properly identified, and the competent court or applicable dispute resolution mechanism must then be determined on that basis.
Conclusion and Assessment
Ownership of patent rights in employee inventions is not determined solely by the fact that an invention was made during employment or through the use of the employer’s technical resources. The classification of the invention as a service invention or a free invention, the employer’s assertion of rights within the statutory deadlines and the parties’ compliance with their respective legal obligations directly affect the determination of ownership.
Moreover, the employer’s acquisition of rights in an invention does not extinguish the employee’s status as inventor or the statutory entitlement to remuneration. In this respect, the legal framework governing employee inventions seeks to protect businesses’ technological investments while ensuring that employees’ contributions receive appropriate legal recognition and economic compensation.
For businesses, effective management of employee inventions requires the systematic recording of invention notifications, monitoring of statutory deadlines, documentation of the legal basis for patent applications and determination of employee remuneration in accordance with the applicable legislation.
Ultimately, effective legal protection of employee inventions depends not merely on obtaining patent registration, but on the proper management of ownership and remuneration from the earliest stages of the inventive process.
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