Latvia Lettonie Lettland. Report Q183. in the name of the Latvian Group by Armins PETERSONS and Gatis MERZVINSKIS

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1 Latvia Lettonie Lettland Report Q183 in the name of the Latvian Group by Armins PETERSONS and Gatis MERZVINSKIS Employers rights to intellectual property Questions 1. The State of positive Law 1.1 The Groups are invited to present the legal framework governing relations between employers and employees in the field of intellectual property rights. In particular, the Groups are invited to state whether these rules arise from provisions concerning labour law or whether these rules arise from provisions concerning intellectual property rights. In addition, the Groups are invited to state whether these rules may be considered as being public policy rules (i.e. mandatory rules) or whether, on the contrary, they may be modified by contractual relations between employees and employers. In Latvia the intellectual property created by employees performing work in the course of their employment is mainly owned by employers. Employers usually sign with an employee an agreement to the effect to grant them total control over any intellectual property generated by their employees and to avoid any issue of ownership arising at a future date when an intellectual property is created by their employee. The rules defining the relations between employers and employees in the field of intellectual property arise from provisions concerning IP rights. Employers and employees general relations are the issues of labor law. These rules are not mandatory rules and may be modified by contractual relations (collective agreements or individual employment contracts) between employees and employers. Ownership of employment inventions therefore depends on the nature of the employee s duties as contained in his or her contract of employment and job description. Acceptance of such employment contract and/or preinvention assignment agreement are an universal requirement of employment for persons, which are employed or hired to design, create, discover or invent, to clearly state that all intellectual property generated in the course of employment belongs to the employer (company). 1.2 The Groups are invited to specify, for each of the intellectual property rights (patents, plant variety rights, copyright or authors rights, patterns and models, and software rights, it being recalled that trademarks and brand rights are expressly excluded from the scope of the study in question) what are the legal solutions concerning ownership of rights over intellectual creations: Patents According to Article 5 of the Patent Law of the Republic of Latvia, the employer has the rights to an employee invention, if the invention has been created by the employee in the course of performing the following work-related duties - fulfilling an employment contract which involves inventive activity or performing research, design or technological works with- 1

2 in the framework of the assigned tasks. Inventions created by an employee that do not fall within the aforementioned situations will belong to the employee. The legal relations between the employer and employee with regard to inventions created during employment, as well as regulations of additional remunerations for the creation and utilization of an invention created during employment, are determined by the collective agreement or employment contract. Besides the inventor of an employee invention must immediately notify the employer thereof. If the employer renounces his rights to an invention or has not within six months informed the employee of his intention to use this right, the right to the invention passes to the employee. The employee and employer refrain from disclosure of the essence of the invention before a patent application has been filed. The rights and responsibilities of the employee and employer may not be affected by a termination of their employment relations. Both parties may only raise mutual claims within three years unless the employment contract stipulates a different term. If an invention has been made in an enterprise, which performs scientific research, design or other creative activities on the basis of a contract with a contract funding party financing the above-mentioned activities, the rights to a patent are determined by the provisions of the contract. If the State commissions particular scientific research or design relating to its sovereignty or security, the right to inventions, which may result while the contractor fulfills this work, belongs both to the State institution and the contractor, and the provisions of use for such inventions shall be determined by a specific contract. Plant Varieties According to Article 9 of the Plant Varieties Protection Law of Latvia, a person who has acquired the breeder s right is an owner of such rights. Breeders are an employer or commissioning party who has entered into a contract with a person who has derived or isolated the relevant variety. Copyright or author s rights According to Article 12 and 13 of the Copyright Law of Latvia, if an author has created a work performing his or her duties in an employment relationship, the moral and economic rights to the work belong to the author. The economic rights of the author may be transferred, in accordance with a contract, to the employer. If a computer program has been created by an employee while performing a work assignment, all economic rights to the computer program so created belong to the employer, unless specified otherwise by contract. Designs According to Article 3 of the Law on Industrial Design Protection of Latvia, if an industrial design has been created in the course of performing one s employment duties, the rights to the patent belong to the employer, provided that a respective contract has been signed between the employer and the designer. The contract determines the employer s and the designer s mutual relations associated with the patent, as well as the employer s right to use the patent and designer s right to proper compensation for the creation and use of the industrial design. Dispute between them concerning the fulfillment of the terms of the contract is to be determined by court. In the case, if a contract has not been signed between the employer and the designer, or if the employer who has a right to the patent refuses to file a patent application for the respective industrial design or, four months after the proposal of designer, the employer has not filed a patent application for the created industrial design, then the right to the patent passes to the designer. An employer can not force his or her employee to sign a contract of employment under which the employer s rights to ownership of invention go beyond the rules prescribed by the Latvian laws regulating ownership and rights to the intangible (intellectual) property. 2

3 Do these rights originally belong to the employer or the employee? The intellectual property rights such as the rights to inventions, plant varieties, industrial designs and software originally belong to the employer, unless specified otherwise by the employment contract. As concerns copyrights, the author is the first owner of these rights. If these rights belong to the employer from the outset, what are the conditions for this attribution? Ownership of employment inventions depends on the nature of the employee s duties as contained in the contract of employment and job description. These rights belong to the employer from the outset if the invention is created in the course of the normal duties of the employee fulfilling an employment contract which involves inventive activity; in course of duties falling outside the normal duties but specifically assigned to the employee and in circumstance that such invention might reasonably be expected to result from carrying out of his duties. It is in the employer s interests to identify intellectual property ownership rights in an employment contract (a formal written agreement) executed by the involved parties. 1.3 The Groups are also invited to provide information on procedures concerning potential disputes concerning the ownership of intellectual property rights over employees creations. Potential disputes concerning the ownership of intellectual property rights over employees creations are within the jurisdiction of the courts, which are usually competent for intellectual property disputes. In Latvia such disputes are solved before Riga Regional Court (the first court instance) and may be further appealed before the Supreme Court (the second (appellate) court instance) and further under cassation procedure before the Senate of the Supreme Court. Under the Civil Process Law of Latvia, conciliation between the parties is possible at any stage unless the case has not been adjudicated. Are these disputes within the jurisdiction of labour courts or, on the contrary, are they within the jurisdiction of the courts which are usually competent for intellectual property disputes? Is there a prior conciliation stage and if so, does it take place before the same court as the one having jurisdiction over disputes concerning the ownership or conditions for use of intellectual property rights over creations made by employees? Does the termination of the employment contract have an influence on the action which an employer can bring to obtain the attribution of rights over an employee s creation? No, the termination of the employment contract has not any influence on such action. Besides, the rights and responsibilities of the employee and employer may not be affected by a termination of their employment relations. Both parties may only raise mutual claims within three years unless the employment contract stipulates a different term. Is there a limitation or statute-barring of the exercise of an action concerning the attribution of ownership rights over an invention or creation made by an employee in the context of an employment contract? Can the employee require the filing of a patent application in order to protect his invention or his other creations (registering patterns and models, etc.)? In the case, if a contract has not been signed between the employer and the designer, or if the employer who has a right to the patent refuses to file a patent application for the respective industrial design or, four months after the proposal of designer, the employer has not filed a patent application for the created industrial design, then the right to the patent shall pass to the designer. 3

4 As concerns inventions there is stipulated by the Patent Law of Latvia that the inventor of an employee invention must immediately notify the employer thereof. If the employer renounces his right to an invention or has not within six months informed the employee of his intention to use this right, the right to the invention shall pass to the employee. 1.4 The Groups are also invited to state whether there is a difference in status between employees in the private sector and researchers in universities or research institutes which receive public funding from the point of view of the employers rights. Yes, there is a slight difference. In Latvia, any person who provides funding for a research projects may demand specified intellectual property rights in return for making the funds available. According to Article 8 and 9 of the Law on Scientific Activities, a scientist has exclusive rights to the intellectual property resulting from his of her scientific activity, unless otherwise stated in their employment contract. If a scientist has been working on the basis of a contract, his or her rights to the property resulting from the scientific work shall be determined by the contract. Property resulting from scientific activity financed from the State budget shall be the property owned by the State. Restrictions of the rights of a scientist may be permitted only if he or she has given written consent prior to starting the scientific research. Information regarding scientific research financed from the State budget shall be public. Access to information related to scientific research may be restricted in case determined by law or by the Cabinet. If an invention has been made in an enterprise, which performs scientific research, design or other creative activities on the basis of a contract with a contract funding party financing the above-mentioned activities, the right to a patent shall be determined by the provisions of the contract. If the State commissions particular scientific research or design relating to its sovereignty or security, the right to inventions, which may result while the contractor fulfills this work, belongs both to the State institution and the contractor and the provisions of use for such inventions shall be determined by a specific contract. 1.5 An important question in practice is whether compensation is due to employees in return for the rights of employers over the creations made by employees. Moreover, it is in this field that the greatest disparities are currently observed in the world. The Groups are therefore invited to specify whether their domestic laws provide employees with a right to compensation (financial or in nature) in return for the transfer of rights over their creations to their employers. The Latvian laws specially do not provide such rights for employees to receive compensation in return for the transfer of rights over their creation to their employer. Such compensation (financial or in nature) may be envisaged in an agreement before commencing the work-related duties involving inventive activity or before the transfer of such rights. How is this compensation calculated? It depends on the mutual agreement between the parties involved. It is possible that between the parties it may be agreed to pay the employee for each of the employee s inventions an additional compensation consisting of a percentage of any income derived by the company from any sale of rights in such invention or part thereof, or from any royalties which the company may collect from licenses to others. Usually employers are interested into pay. 4

5 1.6 Finally, the Groups are invited to state whether there is a significant level of dispute in their countries concerning the ownership and use of rights over intellectual creations made by employees, and to give a general opinion on the effectiveness and/or efficiency of the national system. Recently there have been several cases in which employees have asserted competing claims over ownership of IP rights against former or present employers. Such disputes often arise in determining if the work was created within the scope of employment and because of lacking a signed written agreement to establish the rights for intellectual property ownership. Frequently disputes arise when it is unclear whether an employee is working pursuant to a contract. Besides it is necessary to mention that there still exist some persons (employees) who do not know their rights, what intellectual property means and whom these rights belong to. Such illiteracy of law and personal rights frequently leads to misappropriation and illegal use of intellectual property rights. As far the national system has been appropriate and adequate to solve previous disputes concerning the ownership and use of rights over intellectual creations made by employees. More common problems usually arise between employers and employees relations dealing with the Labor law. 2. Suggestions with respect to International Harmonisation 2.1 Do the Groups think that such harmonisation is desirable on the international level for each of the types of intellectual property rights? Taking into account the globalization of economic relations, it would be desirable to harmonize the intellectual property rights and the status of intellectual creations made within the contractual relations of employment. It would help to avoid possible disputes and misunderstandings between the employees and employers in different countries with disparities in situations between different types of intellectual property. Do the Groups wish such harmonisation to be undertaken through labour law rules or through rules of intellectual property law? As concerns the general rights (i.e. employee s rights) to the intellectual property, they must be governed through intellectual property law. Any rules dealing with relations between an employer and an employee, also concerning employment relations during which an intellectual property could be or has to be created, have to arise from provisions concerning the Labor law and must be the subject to contractual relations. 2.2 The Groups are requested to state whether as a general rule it is the employer who is to be the owner, from the outset, of the intellectual property rights over creations made by employees in the context of their employment contract and in the performance of their tasks, or whether, on the contrary, it is the employee who must conserve his rights, but with the possibility for the employer to have them attributed to it under certain conditions. Employers establish their further employment relations with an employee concluding a collective agreement or an individual employment contract, it means, according to the duties which shall be performed under the contract of employment and to the job description provided therein, the intellectual property rights over creations made by employees in the context of their employment contract and in the performance of their tasks must belong to the employer. We are more tended to stick to the saying I paid for it therefore I own it. 2.3 If the employer was to be considered as owner from the outset of the intellectual property rights over creations made by employees, do the Groups think that the employee should receive a particular reward, in addition to his salary, for these creations, or do they think that such a reward is not justified? Such incentives in the form of a financial reward would be desirable for the respective contribution. 5

6 If, on the contrary, the employer is not vested from the outset in the intellectual property rights over creations made by employees, what would be the conditions for the attribution of these rights and, in particular, what could the remuneration be, corresponding with the possibility of having the intellectual property rights in question attributed to the employer? Do the Groups consider that the adoption in principle of a reward could have an influence over the general system of intellectual property rights and if so, what would that influence be? In our opinion, the adoption of a reward could not have an influence over the general system of intellectual property rights. 2.4 The Groups are also invited to present their opinions on the organisation of disputes concerning the attribution of intellectual property rights over employees creations and concerning their use by employers. Are the Groups of the opinion that such disputes should be governed by the courts which have jurisdiction in labour law matters, or are they more of the opinion that these disputes should be subject to those courts which judge intellectual property disputes? It should be recalled that the disputes may concern various aspects of relations between employers and employees: attribution of ownership of such rights; decisions concerning the means of protection and, finally, any compensation as may be due. Since the intellectual creations are made during the course of performing the work-related duties determined by employment contract and relations between an employer and employee are regulated by the Labor law, in our opinion, disputes between employers and employees should be governed by the court having jurisdiction in labor law matters. The disputes concerning the attribution of intellectual property rights over employees creations and concerning their use by the employer, are subject to those courts, which judge intellectual property disputes. We take into account that intellectual property issues are rather specific to be reviewed by judges who are more experienced just with labor law matters. Intellectual property matters are required to be reviewed by judges who are at least with proper understanding over such matters. Summary The Latvian law concerning intellectual property rights and ownership over an employee made intellectual creations are regulated by the intellectual property laws. The legal relations between the employer and employee with regard to intellectual creations made during employment, as well as regulations of additional remuneration for creations and utilization of an invention created during employment, are determined by collective agreement or individual employment contract. For international harmonization of employer s and employee s rights over intellectual creations, it would be necessary to uniform the rules concerning the ownership of intellectual property rights regarding different types of intellectual property. 6