Burden of Proof Placed on Employer seeking Employee Invention

On July 24th, the Israeli District Court (Haifa) issued its decision in Orian Ltd. v. Yael Bonhe relating to an ownership dispute over patents filed by Yael Bonhe while in Orian’s employ.

The court found that when an invention was filed on the name of the employee, the burden of proof rested with the employer when seeking to show the invention was his. The court also stated that an oral agreement between the employer and employee released the employee from providing notice of the invention under section 131 of the Patent Act.

Eris, The Godess of Discord choosing the apple of contention in the garden of the Hesperides

Orian is a public company providing services in the shipment industry. Yael Bone started working at Orian in 2006 as a project manager. Yael was also responsible for the development of an invention relating to the use of thermal insulation sheets for the shipment of goods maintaining the goods temperature and humidity without external power source. Yael developed the invention and filed, on her own name, a provisional patent application in the US titled BREATHABLE INSULATION DEVICE. While still working at Orian, Yael also filed a PCT application claiming priority from the US provisional application. The PCT application was also filed on Yael’s name. Soon thereafter the parties disagreed on the question of ownership in the invention and soon after Yael resigned and left Orian. Early in 2011 Orian filed its lawsuit and sought the transfer of the invention to its possession.

Yael argued that she and Orian set up a joint venture to execute her invention. That the parties agreed that the invention was hers but that it was agreed to share the invention proceeds and set up a mutual business. Orian argued the invention was entirely its own because Yael was employed at Orian and because the parties did not reach agreement on the sharing of the invention rights.

The court reviewed section 132 to the Israeli Patents Act to determine if the invention constituted an employment invention. Section 132 provides that an employee invention which he devised during and as a result of his employment shall be the property of the employer, if there is no other agreement between them, unless the employer has released the invention within six months from the time he received notice under section 131.

The court stated that section 132 provides four accumulating terms the existence of which provide that the invention shall be the property of the employer: 1. there is an invention; 2. the parties have an employer employee relationship; 3. the employee reached the invention as a result of the employment; and 4. the employee reached the invention during the term of employment.

Section 132 also provides for three exemptions under which the invention shall be the property of the employee: 1. there is an agreement according to which the invention shall be the property of the employee; 2. the employer released the invention to the employee within six months after the employee provided notice to the employer of the invention; 3. the employer failed to provide such notice to the employee within the 6 months from the date the employee provided such notice.

The court stated that section 132 provides that the employer must prove that the invention is his. This, the court stated flows from section 76 of the Patents Act which states that the application for the invention belongs to the person who filed it.

The court found that Orian failed to shows that the invention belongs to it. The court stated that several facts weigh in favor of Yael, including the fact that Orian knew of the filing of the applications in the name of Yael, that between Orian and Yael existed an agreement as to ownership in the invention (this based on various oral and written exchanges between the parties) and that the court preferred Yael’s testimony (also based on the fact that Orian gave no less than 4 different versions on whether an agreement existed between the parties).

Notably, Orian’s counsel argument that Yael was under a duty to provide notice to Orian of her invention (Section 131 of the Patents Act) was rejected because the court stated Orian agreed that the inventions would be filed on Yael’s name. The court therefore provides that if an employer knows of the employee’s invention and of his intent to file a patent application on his name, the requirements under section 131 to provide notice are fulfilled.

The lawsuit was therefore rejected and the court awarded nis60,000 in costs to Yael.