Rights Of Inventor-Employee

Question 1
What are the similarities/differences with regards Patent Law pertaining to the rights of Inventor-Employee in Malaysia and United Kingdom?

Answer 1

Employees, work under the term of an employment, are normally bounded by an employment contract with the employer. Most inventions are created by the employees.

Sec 20 of the Patents Act 1983 in Malaysia, explains the rights of the employees for their invention during their employment. Sec 20(1) gives the employer the right to obtain a patent or invention, when the work is done under the employment which is bounded by the contract. However, if there is an absence in any provision of the employment contract, the inventor would be able to receive the remuneration for the invention.

In certain circumstances, the invention may fetch a greater economic value than what was reasonably foreseen, the inventor can be entitled to equitable remuneration which may be fixed by the Court in the absence of an agreement between parties.

In circumstance where the employee invents something on his own free will even when his employment contract does not require him to take part in any inventive activities. The rule is that, if he goes on to invent something, in the field of activities of his employers', using data and means placed at his disposal by his employer, the invention is still deemed to be accrued to the employer, following Sec 20(2).

However, if the parties fail to produce an agreement to support this, the Court will take into account the employees emoluments, the economic value of the invention and any benefits derived from it by the employer to provide the employee with his equitable remunerations.

It is clear that the employers do not have to pay the employees any inventor's compensation as they have the right to their work, so long as the employment is bounded by the contract that excludes this.

United Kingdom

In the UK, Section 39 of the 1977 Act, explain the right to employees' inventions. In general, it gives the employer the right to own the inventions made by the employee during the course of his employment or even falling out of his lines of duty.
Sections 40(1) and 40(2) of the Act provide employee-inventors with a statutory right to compensation where their inventions are exploited by their employers.

Sec 40(1) and (2) allows employees' to make an application to the Court within the prescribed period that the employee has made against an invention belonging to an employer, for which the patent has been granted. If the benefit derived from the patent is of outstanding and inadequate to the employer, the Court will order the employee to compensate the employees in addition to the benefit derived from the relevant contract.

In the first situation, employees are entitled for compensation is set out in Sec 40(1). This states that where an employee has made an invention belonging to the employer via Sec 39(1), the employer may be entitled to compensation. For an award for compensation to be made, the employee must show
(i) that the patent is of benefit to the employer
(ii) that the benefit is outstanding
(iii) that it is just that the employee be awarded compensation.

In the second, an award for compensation may be made to an employee is set out in Sec 40(2). This provides that additional compensation may be paid where the initial entitlement to an invention lay with an employee but the employee assigned or licensed the invention to the employer. The employee must demonstrate that the remuneration for the transaction is inadequate in comparison with the remuneration derived by the employer from the patent. They must show that it is just additional compensation be paid.

The amount of compensation is directed by Sec 41, that the award should secure the employee a fair share of the benefit which the employers has derived or may reasonably be expected to derive from the patent.


There is an amount of similarity to a certain extent between the Patent Law in Malaysia and in the United Kingdom in relation to the inventor-employee rights to patent. Although, both the laws gives the rights to the invention to the employer while being bounded by the employment contract, compensation are allowed in UK under certain criteria's satisfied by the employee as highlighted above.

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