Intellectual property rights in employment

Intellectual property rights in employment

Employers do not necessarily acquire the right to employees’ creations at work. Employers who want to secure the ownership to such rights should therefore specify this in the agreement with the employee. 

1 Introduction

Intellectual property rights (IPR) is the collective term for rights to intangible assets, such as trademarks, domain names, designs, inventions, know-how and business secrets. Almost all companies have intellectual property rights, and managing these rights in a proper way may secure great values to the company. 

In an employment relationship, intellectual property rights may be created by the performance of an employee. Thus, the question of ownership to such rights arise. The right to ownership to intellectual property rights in employment is to a limited extent regulated by law, with the exception for inventions.

2 The Employees’ Inventions Act - the employer’s right to inventions made by employees

A patent gives the patent holder an exclusive right to exploit his/her invention for a limited time period, normally 20 years. An invention is a practical solution to a problem, where the solution has technical character, technical effect and is reproducible.

Unless otherwise is agreed between the employee and the employer, the Norwegian Employees’ Inventions Act regulates the right to inventions made by employees. The Act applies to patentable inventions, i.e. the invention must be new, differ from what is previously known, and must be reproducible. It is not a condition that the invention is patented. The Employees’ Inventions Act applies to employments both in the public and private sector.

The Act gives employers, on certain conditions, the ownership to, or right to use, inventions invented by their employees. The employer’s right depends on the connection between the invention and the employment. The Employee’s Inventions Act distinguishes between three levels of affiliation. For all these alternatives, the exploitation of the invention must fall within the sphere of activity of the undertaking in order to create a right for the employer. 

2.1 The invention is created in connection with research or inventive work

According to the Act, the employer may demand the rights to the invention if the employee is principally engaged in research or inventive work, and has made an invention through the performance of these tasks. Whether the employee is principally engaged in research or inventive work must be assessed individually in each case.

Furthermore, the employer may demand the rights to the invention if the invention is a result of a specified task assigned to the employee as a part of his/her employment. This applies to all employees, regardless of the employee’s usual tasks. 

2.2 The invention is created with a more remote link to the employment

If the invention has a connection with the employment relationship other than that referred to in the abovementioned alternative, the employer may demand the right to exploit the invention. Furthermore, the employer has a preferential right to acquire a more extensive right to such inventions. The preferential right is limited in time, and is applicable for four months from the employer received notification of the invention from the employee. 

2.3 The invention has been made in circumstances that have no connection with the employment

If the invention has been made in circumstances that have no connection with the employment, the employer has nevertheless priority over others to conclude an agreement regarding the right to the invention with the employee. This preferential right applies for a period of four months after receiving notification of the invention. 

2.4 Duty of notification and right to reasonable compensation

Employees who create an invention must notify the employer of the invention without undue delay. The employer is thus given an opportunity to assess whether it will exercise its right to acquire the rights to the invention. If the employer wants to acquire the right to the invention, such notification must be given to the employee within four months after the employee’s notification of the invention was received. During this period, the employee may not utilize the invention, or take legal actions related to the invention.

If the employer undertakes the ownership to, or the right to use an invention made by an employee, the employee is entitled to a reasonable compensation if the value of the invention exceeds what could be reasonably expected based on the employee’s salary and other benefits, such as bonus. The amount which represents a reasonable compensation may be difficult to determine and must be established due to the specific circumstances of the case. The Employees’ Inventions Act stipulates some elements which shall be given particular consideration when determining the compensation, including the value of the invention, the extent of the right that the employer has acquired, the employment conditions and other relevant factors of the employment.

If the employee and the employer fail to reach an agreement, for example concerning the compensation for the invention, the case may be brought before the Mediation Board for Employees’ inventions. The Board’s decision is not legally binding upon the parties, but will replace mediation in the Conciliation Board upon a lawsuit, and a court will normally look to the Mediation Board's decision when determining the compensation. 

3 The employer’s copyright to works

Copyright is the right a writer or creator has to his/her works. Such works include literary, scientific or artistic works, such as technical drawings, manuals, presentations, texts, films, computer programmes etc. The copyright gives the creator an exclusive right to utilise the work, to publish the work and to make copies of it. This is the so-called commercial part of the copyright. In addition, the creator has so-called ideal rights to the work, which entails the right to be named as the creator and the right to intervene against abusive use. The creator’s ideal rights to the work cannot be transferred.

Copyright is governed by the Norwegian Copyright Act. Copyright in employment is not specifically regulated by the Act, with the exception for section 71 regarding copyright to computer programs created in employment. According to this section, the right to such programs is automatically transferred to the employer unless otherwise has been agreed between the parties (except for the ideal rights).

For other works there is a non-written rule which states that unless otherwise is agreed, the copyright to a work created in an employment relationship is regarded as having been assigned to the employer to the extent that this is necessary for the employment relationship to achieve its objective and that creating such work(s) is also a part of the employee’s tasks.

The “necessity requirement” entails that there must be a clear connection between the employee’s tasks and the work which is created. An individual assessment must be made in each case. The core element in this assessment is what the employee is employed to do. For example, the employer will usually have the copyright to articles that a journalist write in his/her work as a journalist. However, the employer’s copyright does not go beyond what is necessary to fulfil the employment contract.

The rule is only applicable in the absence of other agreement between the employer and the employee. The copyright may be assigned freely, even to legal persons (except for the ideal rights). If it is a great chance that the employee may create works protected by copyright in the employment, and the employer wants to obtain the right to such works, a provision which secures the employer the right to such works should be included in the employment contract.

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