Intellectual property refers to creations of the mind, such as inventions, designs, utility models, industrial designs, and trade secrets. As technology advances, the value and importance of Intellectual Property (IP) becomes more and more important to a business. It is at times the most valuable asset in a business. It is therefore crucial for employers to include Intellectual Property terms in an employment agreement.
Table of content :
What are Intellectual Property terms?
IP Protections under the Egyptian Civil Code
Protections under the Egyptian Intellectual Property Law
IP terms help to ensure that any intellectual property law developed or created by an employee during their employment period belongs to the employer and not the individual employee.
What are Intellectual Property (IP) terms
IP provisions safeguard a company’s valuable assets and prevent employees from claiming ownership over inventions, designs, or other IP assets that they develop using the company’s resources while working for the company. The following are various examples of how effective it is to have IP terms covered in an employment agreement.
a) Ensuring company’s competitive advantage. IP is considered to be a significant driver of a company’s competitive advantage. Covering the IP terms in an employment agreement further enables employers to ensure that any innovations, utility models, industrial designs and trade secrets…etc.., developed by employees remains confidential. This helps to prevent employees from sharing or misusing company-specific knowledge, which could otherwise be used by competitors to gain an edge in the market.
b) Ultimately, an employer should aim to avoid a conflict of interest and/or a competitive stance between the employees and the company: By clearly defining ownership of intellectual property, an IP clause establishes the employer’s exclusive rights to use, license, sell, or otherwise exploit the IP assets created by employees. Without these terms, the patents exclusive rights conferred on the employees may put them in a competitive stance and conflict of interest with the employer, leading to potential disputes and complications.
c) Encouraging Innovation and Investment: IP terms can provide a strong incentive for employees to innovate and invest their creative efforts in developing new inventions. Knowing that their work will be fairly compensated in exchange for an assignment of the patent’s exclusive rights in favor of the employer, encourages employees to contribute their best work and fosters a culture of innovation within the company.d) Facilitating Collaboration and Teamwork: IP terms can explicitly outline the ownership and rights associated with jointly developed intellectual property law. This provision helps to clarify and establish the employer’s rights in situations where employees collaborate on projects or work as part of a team. It prevents potential conflicts or uncertainties regarding IP ownership among multiple employees.
IP Protections under the Egyptian Civil Code
The Egyptian Civil Code No. 131 of 1948 stipulates that when a worker discovers a new invention while in the service of the master, the employer will have no rights in respect of the invention, even if the worker has discovered the invention by reason of the work performed in the service of the employer.[1]An invention discovered by a worker in the course of his work belongs to the employer only if the nature of the work requires that the worker would give his time to such invention or if the employer has expressly stipulated in the contract that he will have the right on the inventions discovered by the worker.
However, if the invention carries significant economic importance, the worker may, in events falling within the preceding paragraph, is entitled to claim a special remuneration to be estimated in accordance with the principles of equity. The purpose of the assessment of such remuneration takes into account both the extent of the support provided by the employer as well as the facilities and resources used by the worker for the purpose of achieving the invention.
Protections under the Egyptian Intellectual Property Law
The Egyptian Intellectual Property Law No. 82 of 2002 (“IP Law”) addresses in Article (7) inventions and patents. The position of the IP law provides that if a person mandates another person to create an invention, all rights that emerge from that invention will be conferred on the first person (the mandator). The employer has all rights which emerge from the inventions created by the worker during the period of employment as long as this invention falls under the scope of the employment agreement. This is provided that the name of the employee inventor shall be mentioned in the patent. In all events, the employee is entitled to the agreed upon remuneration. Where there is no agreement on remuneration, the employee is entitled to a fair compensation from the mandator/employer.
Right of Option. When the invention falls within the scope of the activity of the facility for which the employee works, the employer has the right of option, (i) either to exploit the invention, or (ii) to buy the invention patent in exchange to a fair compensation to be paid by the employer to the employee. This right of option is valid for three months from the date of notification with granting the patent to inventor/employee. In all events the invention must remain attributed to the name of the inventor.
The patent application that is filed by an employee in the patent office within one year from the termination of the employment contract in a private or public entity, shall be considered as it was filed during the validity of employment contract. Both the employee and the employer shall be entitled to all the rights stipulated in the preceding articles, as appropriate. Such a period shall extend to three years if the said employee establishes or joins a competing company, and the invention was a direct outcome of that employee’s work and previous experience in the previous company in which he was working for. However, the Intellectual property law does not regulate employer IP rights over employee’s creation in other fields of IP, such as utility models, or planet verities, or industrial designs, etc.
Both the Egyptian Civil Code and the intellectual property law regulate the IP ownership of an invention created by an employee during the validity of an employment agreement.[2] There are three scenarios to consider in this regard.
A. If the employee created the invention as per the employment agreement during an employment period. A duty arises on the employer to provide the employee with the resources and equipment which are necessary for the employee to carry out their obligations under the employment agreement. As a result, the employer has all IP rights over the invention and all consequences of such rights. Meaning, the employer is entitled to defend and protect the IP right arising from the patent/innovation against any potential infringements. Furthermore, the employee shall be remunerated for the inventions created by her/him during the validity of employment relationship as long as these inventions are related to the employment agreement and carry economic value. In case there is no prior agreement on a remuneration, the employee shall receive a compensation. The support provided by the employer shall be considered in the assessment of such compensation.
B. If the employee created the invention during the employment period but the invention falls outside the scope of the employment agreement. In this event the employee has all IP rights over the invention/patent. However, if the invention is related to the nature of the work of the employer, Article (7) of the Intellectual property law provides that the employer has the right to choose within three months between transferring the ownership of the invention/patent to the employer or obtaining a license to exploit the invention in return for a fair compensation. This is to avoid encouraging employees to compete with the employer.
C. The explicit contractual term which allows the employer to own all of an employee’s inventions/patents even if these inventions do not fall within the scope of the employment agreement. In all events, the employee has the right to be fairly compensated, where the inventions have an economic value. The employee’s name should also be mentioned as the inventor in the patent certificate.
Patent applications filed by an employee in the patent office within one year from the termination of the employment agreement in a private or public entity, are considered as it was filed during the validity of employment agreement. Such a period shall extend to three years if the said employee establishes or joins a competing company, and the invention was a direct outcome of that employee’s work and previous experience.
Evidently, the Egyptian laws provide for protections in favor of the employers as well as the employees. This means that to define and secure valuable IP work achieved by employees during their employment period, it is important for employers to define and set out these terms in the employment agreement. The clearer the terms, the stronger the employer’s right to the inventions made by their employees.
