The legal relations between employees and employers with respect to employees’ inventions and improvement suggestions are regulated in the Employee Invention Act (ArbEG).

Objectively, the ArbEG, according to §§ 1, 2, only applies to technical inventions that are eligible for patent or utility model protection and to technical improvement suggestions. Thus, the regulations of the ArbEG do not apply to designs/Community designs, trademarks or plant varieties protections.

Although the evaluation by patent authorities or courts as not being patentable is retroactively applicable, a job-related invention must still be remunerated until the legal validity of such a decision.

According to § 1 ArbEG, the scope of validity of the ArbEG is limited to employees in private and public service, public officials and soldiers. An employee is a person who, due to an employment contract under private law, is obliged to perform externally directed, dependent work for another person under personal dependence. According to § 6 of the Patent Act (PatG), the inventor or his legal successor holds the patent. If an employee is the inventor, the company can become his legal successor.

It is regulated in the ArbEG how and under which conditions this is supposed to occur. The law differentiates between job-related inventions and free inventions. A job-related invention is given if the invention, according to § 4 ArbEG, has arisen during the term of the employment due to the professional activity or is significantly based on the experience of the company. If these requirements are not present, the invention is a free invention. The ArbEG contains numerous formal conditions, in particular for the treatment of job-related inventions.
According to § 5 ArbEG, the employee has a reporting obligation, i.e. he must immediately and separately report his job-related invention to his employee in written form. In addition, the employee must precisely describe his invention and explain how it has been created because this determines the level of remuneration. Then, the employer must immediately confirm the time of reception of the invention disclosure in writing. If the report is incomplete, the employer can object to it within two months. If he does not object to the report, it is deemed correct. If the employer wants to acquire any rights to the invention, he can assert them by a corresponding declaration to the employee.
The assertion of the rights is deemed declared if the employer does not release the job-related invention until the expiry of four months after the reception of the invention disclosure to the employee in written form. The employee has a right to a reasonable remuneration as soon the employer has asserted his rights to the job-related invention.