When a key employee leaves a company, a familiar request often lands on the legal team’s desk: “Let’s have them sign something confirming they have no further claims to compensation for their inventions.” It sounds tidy. It feels safe. And under German law, in the blanket form it is usually drafted, it frequently does not work.
Germany regulates employee inventions through a dedicated statute, the Gesetz über Arbeitnehmererfindungen (Act on Employees’ Inventions, or ArbnErfG), substantially modernised in 2009. It is one of the few areas where the law deliberately overrides freedom of contract to protect the employee. Understanding why a simple waiver fails — and what does work instead — is essential for any company that develops patentable technology with German staff.
The starting point: not every workplace invention belongs to the employer automatically
A common assumption is that anything an employee invents on the job is simply the company’s property. German law takes a more structured route.
The Act distinguishes between service inventions (Diensterfindungen) and free inventions (freie Erfindungen) in § 4 ArbnErfG. An invention made during the employment relationship is a service invention if it either:
- arose out of the employee’s assigned duties within the company, or
- is essentially based on the experience or work of the company (§ 4(2) No. 2 ArbnErfG).
Everything else is a free invention (§ 4(3)).
This second limb is where job titles become misleading. Suppose an employee’s contract describes their role as “business development,” yet in practice they carry out research that leads to patented formulations. The contractual label does not convert those inventions into free inventions. Because the work draws on the company’s know-how, materials, and environment, it will typically qualify as a service invention under § 4(2) No. 2 regardless of what the job description says. The actual activity, not the title, controls the classification.
How the employer acquires the rights — including by doing nothing
For a service invention, the Act sets out a procedural sequence:
- The employee must report the invention to the employer in text form (Meldung, § 5 ArbnErfG).
- The employer then claims it (Inanspruchnahme, §§ 6, 7), which transfers the rights to the employer.
The 2009 reform added a quietly powerful rule. Under § 6(2) ArbnErfG, if the employer does not expressly release the invention within four months of a proper report, the invention is deemed to have been claimed. Silence now favours the employer. In practice, where a company has filed patent applications naming its employee as inventor, this is strong evidence that the inventions were reported and claimed — and therefore that the full compensation regime applies.
The right that survives everything: reasonable compensation
Once an invention has been claimed, § 9 ArbnErfG grants the employee a statutory right to reasonable compensation (angemessene Vergütung). Three features of this right surprise employers most often:
- It is independent of salary. The employee’s ordinary wages do not, by themselves, satisfy it.
- It survives the end of employment. An inventor who resigns, retires, or is dismissed keeps the claim for inventions already claimed by the employer.
- It can last as long as the patent generates value. Compensation is tied to the commercial benefit the employer derives over time.
This is precisely why the “departure waiver” is so tempting — and why the law resists it.
Why the blanket waiver fails: § 22 ArbnErfG
The decisive provision is § 22 ArbnErfG. The Act’s rules cannot be contracted away to the employee’s disadvantage. An agreement in which an employee simply confirms, in advance and in general terms, that they “cannot claim compensation” for their inventions is, in that form, very likely void.
The rationale is protective: the legislature treats the inventing employee as the structurally weaker party and refuses to let them bargain away a core statutory entitlement before its value is even known.
What does work: the post-reporting settlement
Section 22 is not, however, an absolute ban on agreements. It draws a sharp line in time. Agreements about a service invention are permissible once the invention has been reported (or otherwise made and disclosed). Before that point, the employee cannot meaningfully assess what they are giving up; afterwards, they can.
This opens the realistic path for a departing inventor. Where the inventions already exist and have been disclosed, the company and the employee can validly conclude a settlement or discharge agreement (Abgeltungsvereinbarung) covering compensation for those specific inventions. Such an agreement can include a lump-sum payment and a clean “no further claims” clause — and it will hold up, because it concerns identified, already-reported inventions rather than a blanket future surrender.
In short: the instrument is a negotiated settlement, not a unilateral waiver.
Even a valid settlement must be fair: § 23 ArbnErfG
Concluding the agreement at the right time is necessary but not sufficient. Under § 23 ArbnErfG, an otherwise admissible agreement is unenforceable if it is substantially inequitable (in erheblichem Maße unbillig). And the employee may raise that inequity for up to six months after the employment ends (§ 23(2)).
A token payment dressed up as a settlement is therefore fragile. To be robust, the figure should rest on a genuine valuation.
How compensation is actually calculated
German practice values employee inventions primarily through the licence-analogy method (Lizenzanalogie), guided by the official Richtlinien für die Vergütung von Arbeitnehmererfindungen im privaten Dienst. The core formula is:
Compensation = Invention Value × Share Factor (Erfindungswert × Anteilsfaktor)
- The invention value is typically derived from a reasonable royalty on the relevant turnover — what a third party would have paid to licence the technology.
- The share factor (Anteilsfaktor) reflects the employee’s actual contribution, combining three elements: how the problem was identified, how the solution was found, and the employee’s duties and position within the company.
Here lies a trap for employers. The share factor is lower when inventing is central to the employee’s job (a head of R&D is paid to invent) and higher when the invention falls outside the employee’s assigned role. So an invention produced by someone formally employed in “business development” may attract a larger employee share — meaning the very job-title argument companies hope will reduce exposure can increase it.
The other scenario: what if the invention was genuinely “free”?
Occasionally an invention really does fall outside § 4(2) — it neither arose from the employee’s duties nor essentially relied on the company’s work. Then no § 9 compensation claim arises. But this is rarely the convenient answer it appears to be, because it raises a different question: does the company actually own the invention at all?
For free inventions, the employer’s entitlement is limited (the employee must offer a non-exclusive right of use under §§ 18–19), and the company would need a valid assignment to hold full rights. Insisting an invention is “free” to avoid compensation can therefore expose a gap in the company’s chain of title to its own patents — a worse problem than the one it was meant to solve.
Resolving disputes: the Schiedsstelle
German law also provides a low-threshold forum before the courts. Under § 26 ArbnErfG, either party can bring the matter to the arbitration board (Schiedsstelle) at the German Patent and Trade Mark Office (DPMA). Its proposals are non-binding but influential, and in many disputes it is the natural first stop before litigation.
Practical takeaways
For employers:
- Classify each invention under § 4 by reference to the actual R&D activity, not the contractual job title.
- Keep clean records of the report (§ 5) and the claim (§§ 6, 7), including any deemed claim under § 6(2).
- Do not rely on a blanket advance waiver — it is likely void under § 22.
- Use a post-reporting settlement agreement instead, with a defensible valuation (licence analogy) that can survive the § 23 equity test and the six-month challenge window.
- If you treat an invention as “free,” separately confirm you hold a valid assignment of title.
For employees and inventors:
- Your compensation right does not disappear when you leave.
- You cannot be made to sign it away in advance, but you can agree a settlement once your inventions have been reported.
- You have up to six months after departure to challenge a settlement that is substantially unfair, and the Schiedsstelle offers an accessible route to do so.
The bottom line
A departing inventor cannot simply be asked to sign away compensation they are statutorily owed; § 22 ArbnErfG stands in the way. But the law is not a dead end for employers. A properly timed, fairly valued settlement — concluded after the inventions are reported and built on a real licence-analogy calculation — achieves the clean break companies want, in a form that actually holds.
The mistake is reaching for a waiver. The solution is reaching for a settlement.
