Induced innovation of the German Employees' Invention Act

Abstract

Entered into force in 1957, the German Employees’ Invention Act1 (GEIA) is a globally unique obligatory incentive system for staff in industrial research. It traces back to earlier discussions on the dogmatic contradiction between German patent law and employment contracts, which came up with the enactment of the first German patent law in 1877. In the chemical and pharmaceutical industry the compensation for employed inventors was regulated early in a collective labor agreement2 for the academically educated employees from 15th June 1920. It is nowadays nearly forgotten that the first legal arrangement for employee inventions was then made during the Nazi era, when the Reichsminister for Armament and Ammunition, Hitler’s architect Albert Speer, decreed in 1942 the order on the treatment of inventions from allegiancemembers.3 This order provided a basis for the enactment of GEIA in 1957. This Article is concerned with the question whether GEIA is an appropriate means to spur employees to innovative behavior. Because of its historic predecessors the pharmaceutical industry is taken as an example. Furthermore, pharmaceutical research was in the past 30 years subject to significant changes quietly undermining the very foundations of the GEIA. Up to the 1980s, the pharmaceutical industry was considered one of the most attractive business sectors. But at the latest in the 1990s, this has changed due to attempts of cost reduction in most health care systems. This attempt caused a change in the competitive environment which resulted in increased pressure on the price levels for research based drugs. This happened not only during the term of a patent but even more so after its expiration. Besides the usual competitive strengths, there have been national interventions like price, profit or budget controls and additional payments added in most countries. More and more countries urge doctors to prescribe