Inventor (patent) - Compensation of Inventors

Compensation of Inventors

There are many ways in which an inventor might be compensated for a patent. An inventor might bring the patented product to market under the protection of the monopoly created by the patent. The inventor may license a patent to another entity for an up front fee, an ongoing royalty or other consideration. The inventor may also sell the patent outright. Henry Woodward, for example, sold his original US patent on the light bulb to Thomas Edison who then developed it into a commercially successful product.

Inventors who are employees of a company generally sell or assign their patent rights to the company they work for. The extent to which they are compensated will vary from jurisdiction to jurisdiction and may depend upon any prior employment agreements that are in place. Under Japanese patent law, for example, an employee is entitled to a “reasonable fee" for an invention. In 2006 Hitachi was ordered to pay an employee $US 1.6 million for an invention the employee made that was commercially valuable. In United States, however, an employee may have to sign over the rights to an invention without any special compensation. Germany has a law on employees' inventions providing strict rules concerning the transfer of rights to an invention to the employer. It also prescribes mandatory compensation of employees for inventions they make. This right to compensation cannot be waived in advance, i. e. before the employer is informed of an invention.