Transfer of inventions by managing directors

A managing director who is integrated into the technical management of the company and in doing so makes an invention must offer the invention to the company. This only applies, however, if there is no agreement stating otherwise and presupposes that the invention is related to the company’s purpose and primarily came into existence with the help of company resources.

Background

The OLG [Upper Regional Court] Frankfurt am Main had to make a decision on the following: The plaintiff was a GmbH, the business purpose of which was to convert vehicles in order to create air-conditioned transport facilities. The defendant was a shareholder of the plaintiff and - without having a corresponding contract of employment - was active as a managing director.

The plaintiff was commissioned with equipping vehicles for the transportation of medical products. According to European regulations, a particular temperature corridor must be adhered to at all times. This presents a problem above all when loading and unloading. The defendant, together with the salaried employees of the plaintiff and the client, was able to find a simple and cost-effective solution using insulation materials and ventilators in the hold.

The defendant applied for several samples of use and European patents for the technical solution in his own name. The plaintiff demanded the transfer of these rights to it.

The judgement of the OLG Frankfurt of 04.13.2017, ref. 6 U 69/16

The OLG Frankfurt allowed the action. There was indeed no provision about the transfer of inventions in the articles of association and there was no contract for employment of managing directors. But an additional interpretation of the articles of association produced a duty of the defending shareholder to offer the inventions. The defendant was only to be reimbursed the official charges for the application.

The court drew a parallel with the duties of company organ members who are not simultaneously shareholders. Their service contract regularly included the duty to transfer technical developments which the company organ member made with the help of the company’s resources within the framework of his contractually agreed activity. There would however also be such a duty if the service contract did not contain any specific provisions. In the present case, the defendant has been integrated into the company management in a way which is similar to a managing director. He possessed the same powers, appeared and was remunerated as such. The technical solution evidently originated from the cooperation of the defendant with the salaried employees of the plaintiff and the client. In doing so, it was mainly the plaintiff’s resources which were relied upon. The invention was therefore decisively based on the plaintiff’s know-how, infrastructure, material and an operating loan from it.

The defendant is therefore not to be conceded a remuneration for the invention because he was obligated to offer his invention free of charge; this was settled with the remuneration he received for his work as managing director.

Comment

The decision is convincing and clarifies that managing directors are not protected by the “Arbeitnehmererfindungsgesetz” (ANErfG) [the German law on employee inventions] like employees. While employees always receive a suitable payment for their inventions (Section 9 ANErfG), in the case of managing directors it is often assumed that the invention is settled through their remuneration. It is however always to be decided on the individual case because the invention, the field of activity of the managing director and the agreements existing between the parties are to be considered. If an invention is made within the framework of the activity assigned to the managing director with the help of the company’s resources, however, the managing director is not entitled to any payment. This also applies in the present judgement if a shareholder is integrated in the activity like a managing director.

Both from the perspective of the managing director as well as from the perspective of the company, it is advisable to stipulate provisions about the transfer of inventions in the service contract. If the managing director is at the same time a shareholder, the provision can also (in addition) be recorded in the articles of association or a shareholder agreement.