If you developed something patentable during your employment in Germany — as an engineer, chemist, pharma researcher, or software-hardware developer — German law gives you a personal money claim most employees have never heard of: under the Employee Inventions Act (Arbeitnehmererfindungsgesetz, ArbnErfG), your employer must pay you separate inventor compensation (Erfindervergütung) on top of your salary for every service invention it claims and uses — and these claims routinely surface, unasserted and unpaid, at termination. For productive inventors, the amounts reach five and sometimes six figures. In our practice, the inventor-compensation audit is a standard step in every exit involving R&D staff.
The system in a nutshell
German patent law starts from the inventor principle: the invention belongs to the person who made it — you, not your employer. The ArbnErfG then reconciles this with the employment relationship: the employer may take the invention (Inanspruchnahme), but it must pay for it. Salary alone does not buy your inventions.
Diensterfindung vs. free invention
A service invention (Diensterfindung) is one made during the employment that either arose from your work duties or is materially based on the company’s experience or activities (§ 4 ArbnErfG). Everything else is a free invention — yours, subject only to notification and a limited right of first refusal for the employer. Most inventions by R&D employees are service inventions; inventions in your garage on weekends can still be service inventions if they build on your work.
The reporting duty
You must report a service invention to the employer without delay, in text form, separately marked as an invention report (§ 5 ArbnErfG) — describing the technical problem, the solution, and how the invention came about. Email suffices. This report starts the clock that determines ownership.
Inanspruchnahme — automatic after 4 months
Since the 2009 reform, the employer is deemed to have claimed the service invention if it does not release it in text form within four months of receiving the proper report (§ 6(2) ArbnErfG). Claiming transfers all rights in the invention to the employer — and simultaneously triggers two employer duties: to file for IP protection (§ 13 ArbnErfG) and to pay you reasonable compensation (§ 9 ArbnErfG).
How the compensation is calculated: Lizenzanalogie
The standard method under the official compensation guidelines (Vergütungsrichtlinien) is the licence analogy: what royalty would the employer have paid an outside licensor for this invention?
The formula: Compensation = reference revenue × reference royalty rate × Anteilsfaktor.
- Reference revenue: the employer’s turnover with products embodying the invention (sometimes scaled down for very large volumes).
- Reference royalty rate: the market royalty in the sector — typically 0.5–1% in automotive supply, 1–3% in machinery and electronics, 2–5% and more in pharma and chemistry.
- Anteilsfaktor (share factor): your personal share, reflecting how the task was set, how the solution was found, and your position and resources. For ordinary R&D employees the factor typically lands between roughly 10% and 25%; it is higher for employees whose job description had nothing to do with inventing, lower for research directors.
Example arithmetic: €8m annual product revenue × 1.5% royalty × 15% share factor = €18,000 inventor compensation per year of use — per invention, for the life of the patent, divided among co-inventors by contribution. Even modest inventions in steadily selling products accumulate meaningful sums over a decade.
Not waived by standard settlement clauses — unless explicit
Termination and settlement agreements almost always contain a general settlement clause (“all mutual claims from the employment relationship are settled”). Inventor compensation occupies a special position: the ArbnErfG’s protections cannot be contracted away in advance (§ 22 ArbnErfG), agreements about inventions are subject to a fairness review (§ 23 ArbnErfG — significantly inequitable arrangements can be challenged), and courts construe general waiver clauses narrowly where a specialised statutory claim of this kind is concerned. The practical rule: a boilerplate Abgeltungsklausel that never mentions inventions is a weak basis for the employer to refuse payment — but do not rely on that. If you have inventions, address them expressly in the settlement: either carve the claims out or price them into the severance consciously.
Limitation periods
The claim is subject to the regular limitation period: 3 years from the end of the year in which the claim arose and you knew (or grossly negligently failed to know) the relevant circumstances (§ 195, § 199 BGB), with an outer 10-year ceiling. Because compensation accrues year by year with the employer’s use, older years fall away progressively — every year you wait costs you a year of claims. Note also: contractual exclusion periods in employment contracts generally do not capture inventor compensation, since ArbnErfG claims cannot be prejudiced by pre-agreed standard terms — one of the rare claim types that survives a missed Ausschlussfrist.
How to assert the claim
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Inventory your inventions
Search DPMAregister and Espacenet for patents and applications naming you as inventor. Collect your invention reports, lab notebooks, project records.
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Demand information (Auskunft)
You are entitled to information about the use of your inventions — revenues, licences, scope of use — to compute compensation. This information claim is the lever; employers who ignore it face a staged claim (Stufenklage) in court.
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Compute and demand
Apply the licence analogy with a defensible royalty rate and share factor; demand payment for the non-time-barred years and ongoing annual settlement.
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Escalate via Schiedsstelle or court
The Arbitration Board (Schiedsstelle) at the German Patent and Trademark Office offers a low-cost, expert route that produces settlement proposals; alternatively the civil courts. After the employment has ended, the Schiedsstelle route is optional, not mandatory.
Who typically has these claims
Engineers in automotive and machinery, chemists and pharma researchers, medical-device developers, semiconductor and telecoms engineers — anyone named on a patent. Pure software is patentable in Europe only within limits (“computer-implemented inventions” with technical character), so software employees have claims mainly where their work touched embedded systems, signal processing, or technical processes. Doctoral researchers at universities fall under the special university regime (§ 42 ArbnErfG) with a fixed 30% share of exploitation revenue.
Worked example
A sensor engineer at a Rhineland automotive supplier, 11 years of service, is dismissed in a restructuring. During her tenure she reported five inventions; the employer claimed four and obtained patents; two are used in a sensor module that has sold steadily since 2019. She never received a cent of inventor compensation and the draft termination agreement contains a sweeping waiver.
Our audit: DPMAregister shows her as co-inventor (50% contribution) on both used patents. The module generates about €12m in annual revenue; the sector royalty is 0.75%; her share factor computes to 14%. Annual compensation per patent family: €12m × 0.75% × 14% × 50% ≈ €6,300 — about €12,600 per year across both, and roughly €63,000 for the five non-barred use years, with ongoing annual claims while the patents run. We carve the inventor claims out of the settlement waiver, and the employer ultimately buys them out for a lump sum of €85,000 — paid on top of the €68,000 dismissal severance calculated conventionally (see severance calculation). Without the audit, the standard waiver would have been signed and the claims arguably lost.
Frequently asked questions
I never filed a formal invention report — do I still have claims?
Often yes. If the employer applied for a patent naming you as inventor, it plainly knew of and used the invention; it cannot rely on the absence of a formal report it never needed. The compensation duty attaches to the claiming and use of the invention.
My contract says all inventions belong to the employer and are “fully compensated by the salary.” Valid?
No. Provisions of the ArbnErfG cannot be modified to your disadvantage by agreement made before the invention is reported (§ 22 ArbnErfG). Blanket IP-assignment clauses from US-style contracts do not eliminate German inventor compensation.
The patent was never granted — the application is still pending. Compensation anyway?
Yes. Compensation is due for the use of a claimed service invention from the moment of use; a pending application supports (somewhat discounted) compensation, and even inventions kept as trade secrets instead of patented remain compensable (§ 17 ArbnErfG).
I left Germany after the dismissal. Can I still pursue the claim from abroad?
Yes. The claims exist independently of your residence, and both the Schiedsstelle and German courts can be engaged through counsel without your presence. What matters is limitation — act within the 3-year window.
My employer sold the patents to another company. Who pays me now?
The compensation duty follows the economics: your (former) employer remains liable for its own use and must account for exploitation proceeds; on a business transfer, the acquirer typically steps into the obligations. Either way, the sale price of a patent portfolio is itself an exploitation event relevant to your compensation.
Is inventor compensation taxed like severance?
It is taxable income; lump-sum buyouts of multi-year claims may qualify for the mitigated taxation of multi-year remuneration (§ 34 EStG). Structure the payment consciously in the settlement — the label matters.