Employer inspires and employees will do their best to outperform. Not every employee is hired to create inventions but every human given the right context and support has an intellect to be creative. In the digital world and knowledge economies, the value of intangibles are significantly higher than the value of tangible assets, which are limited. Intangibles can grow without new capital investments except for exploitation of Intellectual Property Rights for sustainable growth of an enterprise. The underlying question would be how to achieve such an idealistic objective in realistic terms that an enterprise can grow without injecting capital assets. The first and foremost step is to start treating employees as Human Resource Assets just like other tangible assets, except for the difference that there is no annual depreciation unlike for fixed assets, but there ought to be appreciation by creation of intangible assets.
The five steps for turning an Enterprise into Innovative Enterprise:
- Corporate Policy for Innovation
Invention landscape begins with strategic directions of the Board of Management and shareholders. In the world today, it is incumbent upon every organization to be innovative in one form or another. Whether for cutting costs, or reducing energy consumption, carbon foot print, safety of workers, environment free from GHG emissions and safeguard against not only pandemics and viruses but also from cyber-scams and hacking. It is the duty of every employee to be forward thinking and alert the management of new threats, risks and possible solutions as countermeasure. A policy which encompasses such elements in conjunction with appropriate remuneration and incentive schemes sets the foundation for inventive steps across the organization.
- Engaging Each Employee for Proposing Inventive Initiatives
Unless inventions and improvements are part of the weekly or monthly requirements, it will be difficult to cultivate a culture of innovation. Management is responsible in inspiring and leading the teams under their respective supervision. The best way to engage the employees is through setting examples, leading the way and then supporting with appropriate resources, till the employees start taking ownership of their work areas and feel proud of their achievements. Employer as an ultimate owner, bears the responsibility of keeping the employees gainfully employed and innovatively engaged, through new initiatives and setting goals.
- Employment Contract with Clear and Unambiguous Terms for Ownership of Inventions
In employment contracts, seldom terms related to intellectual property and rights of employees would be explained clearly. When an employee discovers or invents something patentable, then it is too late to start negotiating terms of engagement. The statutes of the country and standard clauses in employment contracts do help to some extent. However, the case laws are full of incidents which have gone to courts to settle disputes on ownership of inventions between employer and employee.
In Japan, employer needs to prove that there was consultation between the employer and the employees to set standards for remuneration, there was adequate disclosure of the standards for remuneration, and ownership of invention remains with the employer. Likewise, under German statutes, there is a well-defined process before employer can be treated as an owner of a invention.
In USA, contract law principles, labour laws of states and rights of citizens under the Constitution have an interplay to establish ownership of patents and intellectual property rights.
- Transparent Incentives Policy for Inventive Employees
Though the national IP Laws and Statutory Regulations, provide the ownership of inventions to an employer, but employee contracts of employment must contain certain form of remuneration or incentives for any form of invention by an employee. The German Act on Employee Inventions (GAEI 1957, revised 2009) provides a detailed method of computation of incentive for registered innovation, if an agreement is not recorded in any contract of employment. In other developed countries with high percentage of Patent and Industrial Designs registrations, the responsible enterprises publish incentive policies and are contain regular updates in consultation with employees. It is immaterial whether an employee was engaged in R & D function or otherwise. Innovation can take place at front desk to background workers who have rare opportunity to be seen in research or strategy development teams. Once employees know that if their innovation is promptly reported and gets recognised, there will be an incentive to report. This will create a culture of innovation among all employees.
- Timely, Periodic, Recognition and Registration of Intangible Assets
GAEI provides a four (4) months period for an innovation to be reported to an employer. It also distinguishes between Service Invention (within the ambit or the scope of employment) and Free Invention (any other invention made during the period of employment). In order to claim ownership, employer has to take positive steps within a brief period. Furthermore, if innovation landscape is well established then employer can record, reward and register it on time. If it is not noticed, then when the employee leaves and joins competitors, the situation could be either court litigation and or significant economic loss to the previous employer and windfall gain for the new employer.
In summary, above is just a reflection of bare minimum aspects of creating and harnessing intangible assets in an enterprise. This is a subject of careful analysis for each organization as it is unique to a particular enterprise and cannot be duplicated or replicated in another enterprise.
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