As the summer season comes to an end, we continue with our series on Entrepreneurship Law. As our valued readers are aware, in our previous article, we addressed Software Ownership. In the upcoming two weeks, we will focus on one of the most critical elements of the innovation process: inventions, and the legal significance and strategic role of patents that protect these inventions. At this point, understanding what constitutes an invention and the criteria for patentability is crucial in making the discussion on patents’ importance and their place in modern practice more comprehensible. Therefore, this week, we will begin by defining the concept of an invention and clarifying the term itself.
What is an Invention?
Primarily defined in Articles 82 and 83 of the Industrial Property Law No. 6769 (“IP Law”), an invention is described as an intellectual product that offers a new and industrially applicable solution to a technical problem. In this context, the protection of inventions is of great significance not only for individual entrepreneurs but also for inventions created by employees within businesses. At this stage, if we examine the legal definition of employee inventions and how they are assessed, the Regulation on Inventions Made by Employees, Inventions Made in Higher Education Institutions, and Inventions Arising from Publicly Funded Projects (“Regulation”), Article 4 defines employee inventions as either service inventions or free inventions, which can be protected by patents or utility models created by the employee. According to the Regulation and Article 113 of the IP Law, employee inventions are divided into two categories. Under the relevant legislative provisions:
- Service Invention: Inventions made by an employee during their employment relationship that are the result of activities for which the employee is responsible in a business or public administration or are based largely on the experience and work of the business or public administration.
- Free Invention: Inventions outside the scope of service inventions as defined in Part One, and inventions made outside the scope of inventions produced in higher education institutions as defined in Part Two.
Given the significant value and impact of inventions created by employees for entrepreneurs and businesses, it is crucial for entrepreneurs to be aware of the important differences between service inventions and free inventions. Moreover, it is essential for employers to recognize that service inventions are generally more advantageous.
What are the Differences Between Service Inventions and Free Inventions?
- Employer’s Rights and Control:
In the case of service inventions, employees are obligated to present their inventions to the employer. Since these inventions are typically related to the employer’s field of activity, the employer can claim full rights over them. This enables the employer to understand the value of the inventions and integrate them into the company’s innovation strategy. On the other hand, for free inventions, as they are generally unrelated to the employer’s activities, the employer’s rights are limited, and ownership of the inventions usually remains with the employee.
- Competitive Advantage and Innovation Power:
Service inventions can enhance the employer’s competitive advantage and bolster the company’s innovation capabilities. Employers can leverage service inventions to develop new products, improve business processes, and strengthen marketing strategies. Moreover, since employers have proprietary rights over service inventions, they can protect these inventions from competitors and fortify their leadership position in the market. Free inventions, on the other hand, are often personal initiatives of the employees, and as such, may not directly contribute to the company’s competitive edge or innovation strategy.
- Collaboration and Incentives:
Service inventions encourage collaboration between employers and employees, offering the opportunity to involve employees in the innovation process. Employers can provide appropriate incentives for service inventions, thereby increasing employee motivation and fostering the company’s innovation culture. Conversely, free inventions, being largely individual efforts, have a more limited potential to promote collaboration or enhance team spirit.
As can be observed, service inventions are more advantageous for entrepreneurial employers, as they provide the employer with ownership rights over the invention, enhance competitive advantage, promote collaborative structures, and motivate employees. However, entrepreneurial employers are also subject to legal obligations regarding service inventions. Under these obligations, they must receive notification of inventions made by employees and compensate them appropriately. The Regulation contains significant provisions on how this compensation should be calculated. Therefore, when calculating the compensation to be provided to employees for service inventions, entrepreneurial employers must consider the relevant articles of the Regulation.
In conclusion, for companies developing inventions, contracts between employers and employees have become highly important within the framework of the aforementioned legislative provisions. In the continuation of this article series, the process of legal protection for inventions through patents will be addressed.
For more information on the details of service inventions, you can contact Gemicioglu Law Firm.
Gemicioglu Law Firm
