Special Report
nts has been declining since 1971 ^housands of U *Si patents^
60 dmive form %iûn with zdih such a*, ?he nunc rat a;i< r exampk, the h>dro??.3!;c scan, sïhHub sckL mî d the hke„ and the swU; are ai
66
67
When organic chemist Leo H. Sternbach in 1968 received a patent on the compound diazepam, his employer, Hoffmann-La Roche, automatically awarded him $1.00. Hardly a cause for unbridled jubilation. Actually, Sternbach was far luckier than most chemist/inventors. His company at the time operated an incentive plan (since replaced) under which scientists could receive as much as $10,000 a year for up to 10 years if they discovered a commercially successful product. Sternbach says that, under this plan, he received the maximum bonus of $100,000 for discovering diazepam. His discovery was clearly extraordinary. The compound, the tranquilizer more commonly known as Valium, is currently the world's largest selling prescription drug. Recent estimates are that Valium accounts for about $550 million of Hoffmann-La Roche's annual drug sales, about 40% of the total. Some obvious questions: Was Leo Sternbach, who also was the discoverer of the related tranquilizer chlordiazeppxide (Librium), adequately rewarded for his development? And how about chemists who make discoveries that are less profit-generating? How about industrial chemists who receive from their employer nothing more than $100 or $200 when they obtain a patent (assigned to the employer) that results in the company increasing its annual sales by $500,000 or $1 million or $5 million? Are such inventors rewarded sufficiently? These and related questions on the recognition of employed inventors have been of concern to both inventors and their employers for many years. The issue came to a head 10 years ago when Rep. John E. Moss (D.-Calif.) introduced a bill requiring employers to give additional compensation to employees for inventions. Since then, the subject has been a matter of especially active debate. At one extreme, some employers argue that their inventors should receive no special recognition from their 32
C&EN May 26, 1980
68
il·
1965
te te
rwcriiUi.?! 1 he comï-oUii y he :-.yni.hc'--}.;wi
TOg
employer because they already are being paid to invent. At the other extreme, some inventors contend that they should receive a sizable share of the profits stemming from their discoveries. The employed inventor is obviously very important on today's invention scene. About 80% of all U.S. patent applications are for inventions made by individuals in the course of their employment. The employed inventor is part of the lifeblood of many companies. For example, Dow Chemical points out that the inventions of one former research chemist, William C. Bauman currently account for more than $300 million of Dow's annual sales. Employers are acutely aware of the need to provide incentives to their inventors to develop profitable inventions. And the subject of how to stimulate technical innovation is one of the hottest in scientific circles today. Charles F. Larson, executive director of the Industrial Research Institute, points out that, in the past five years, his organization has held three special half-day sessions on the subject at its semiannual meetings. In the previous five years, it held only one such session. Deep concern exists that American innovativeness is on the decline and that something urgently needs to be done to reverse the trend. According to the Patent & Trademark Office, the number of U.S. patents granted to U.S. residents reached a high of about 56,000 in 1971 and has decreased every year since to about 41,000 in 1978. The 1979 total of 31,000 was phenomenally low because the Patent & Trademark Office lacked enough money that year to print the patents it might otherwise have issued. In the field of chemicals and allied products, however, the number of U.S. patents issued to U.S. residents has fluctuated erratically in recent years. The numbers were about 7500 in 1969, 6400 in 1971, 7100 in 1973, 7800 in 1975, and 7100 in 1977. A research executive of a major chemical firm com-
Recognition for employedi inventors Howard J. Sanders C&EN, Washington
ments, "Data on the number of U.S. patents awarded to U.S. residents are certainly not a precise barometer of American inventiveness. Many companies are doing less patenting these days because of the high cost of obtaining a patent and because they see no reason to patent the relatively trivial inventions that they might have patented in the past. Also, in some industries companies do not patent some inventions because, by the time the patent would be issued, the technology would already be out of date. On the other hand, I believe that the number of U.S. patents granted to U.S. residents is a broad indicator of American inventiveness. " Says one scientist, "There is a widespread feeling that America is becoming less innovative. This is not something that can be measured accurately. But it is becoming obvious that our scientific and technological lead is slipping." Industry, academia, and the government
More and more employers believe that one of the best ways to encourage inventiveness is to reward their inventors, who may be in industry, universities, the government, or elsewhere. In industry, inventors usually must agree that inventions they make while working are their employer's property. This agreement is a condition of the inventors' employment. Whether they get added compensation for an invention is purely a matter of the employer's discretion. Many industrial inventors receive little or no monetary rewards for their inventions. Some people believe that companies should pay the inventor a small percentage (perhaps 0.5 to 1%) of the annual sales of an invention. As might be expected, companies overwhelmingly oppose this idea, partly on the grounds that it would increase their costs and give undesirable preferential treatment to inventors.
In some respects, the situation in academia resembles that in industry. A professor who obtains a patent must assign it to his or her university. If the university licenses the patent, it shares the royalties with the inventor. At about 80% of U.S. universities, the professor gets 15% of the royalties. Some get 25% or more. In this way, the inventor gets extra compensation that is proportional to the commercial value of the invention. All inventions made by federal employees are government property. Whether an inventor receives special compensation for an invention, however, depends on the agency involved. The government situation, as one observer puts it, is "a very mixed bag." Some federal agencies have special boards that determine whether inventors deserve awards for their achievements. Inventors who work for the National Institutes of Health get no share of the royalties on a patent licensed to a company. On the other hand, if they work for the National Bureau of Standards, they do receive a share. There are numerous reasons why employers may give special recognition to inventors. Such recognition: • Honors the inventor for outstanding performance. • Encourages the inventor to do excellent work. • Demonstrates the employer's interest in inventions and patents. • Expresses the employer's appreciation to exceptionally creative inventors. • Makes the inventor feel that his or her contributions are recognized as important achievements. • Increases the employee's job satisfaction. • Encourages employees to disclose their inventive ideas promptly. • Makes the employer competitive with others who give such special recognition and thereby helps retain inventors. • Reduces the desire by some inventors to push for a May 26, 1980 C&EN
33
federal law requiring that employers give extra com pensation to inventive employees. Ethan C. Galloway, vice president of corporate plan ning and development at Stauffer Chemical, says, "Em ployers have an obligation to provide a stimulating en vironment for innovation—one that gives the creative person psychological and emotional support. A good recognition and awards program helps to accomplish this." Edwin A. Gee, chairman of the board of International Paper Co., comments, "When employees contribute in an extraordinary way to the company's profits or wellbeing, they are entitled to compensation above and be yond salary." Alan L. McClelland, a personnel adminis trator at Du Pont, adds, "The employer who chooses not to give additional compensation to workers who make exceptional contributions will find that he does not have a very satisfied group of employees." Another Du Pont employee, Joseph J. Kirkland, a re search chemist and inventor, comments, "Obviously, inventors appreciate recognition. I have yet to find one who refused it. Recognition, however, is not a matter of overriding importance to most inventors. They invent because the work they do is intensely stimulating and challenging. A pat on the back and something extra in the pay envelope are nice, but the real satisfaction for most inventors comes from the joy of inventing." Some employers, on the other hand, do not provide special recognition to inventors. They argue that inven tors are paid to invent and that scientists who come up with patentable ideas merely are doing their jobs. Their salaries and promotions are sufficient rewards. Other employers argue that inventors should not be singled out for special recognition because many other people in the organization also do outstanding work. They believe that all exceptionally creative people should be eligible for achievement awards. For example, an outstanding process engineer who is not in a position to obtain a patent should be just as eligible for recognition as an inventor who gets a patent. Another reason for re jecting special recognition for inventors is that offering such rewards promotes secrecy among scientists who do not want to share their reward with others. Some employers add that giving awards solely to in ventors inevitably breeds jealousy among scientists and engineers who fail to receive them. These may be people in such fields as analytical chemistry, chemical engi neering, or computer science, where valuable ideas are sometimes unpatentable. Bruce E. Franklin, corporate director of management personnel planning and com pensation at Union Carbide, says, "Such jealousy creates divisiveness and reduces the team spirit that is so vital in R&D organizations." Opponents of award programs also argue that they are difficult to administer fairly. A person whose invention is deliberately kept a company secret, for example, would be ineligible to receive an award that would go only to people who get patents. Many observers argue that it is difficult to predict soon after a patent is issued how much an invention ultimately will be worth. Hence, it is hard to determine the proper amount of an award. Another complaint is that award programs tend to encourage inventors to apply for nu merous patents on relatively insignificant ideas. As might be expected, people who favor special awards for inventors are not impressed by such arguments. They say that, although salary increases and promotions are fine, scientists are stimulated by special recognition. Many employers and especially inventors feel that inventors should not be passed off as "just another member of the team." Edwin J. Vandenberg, a senior research associate at Hercules who holds more than 100 34 C&ENMay26, 1980
(A Ο Ο JZ
α.
"cô
to Ζ LLl
o6 Ο
Larson: In past five years, Industrial Research Institute has had more discussions of proper incentives for inventors
U.S. patents, says, "I feel that the inventor is the key individual in the creative process. Without the inventor, there is nothing to develop." Willard Marcy, vice president of the invention ad ministration program at Research Corp., says, "I feel that claims that inventor-recognition programs are dangerous because they promote secrecy and jealousy are grossly exaggerated. Many companies that have such recognition programs—some of them quite elaborate—report that such problems do occur but only very occasionally. And rarely are these problems significant." C. Edward Lorenz, director of research in Du Pont's central research and development department, observes, "Even though we have award programs, we see very little inclination among our scientists to be secretive about their work. If anything, they are eager to talk about their research, so that their own thinking can be stimulated by discussions with company colleagues."
Kirkland: A pat on the back and extra pay are nice, but the real satisfaction for most inventors is the joy of inventing
Vandenberg: The inventor is vital to the creative process because, without the inventor, there is nothing to develop
The most common recognition given to outstanding inventors is monetary. Often the inventor gets a largerthan-usual salary increase. Many companies give inventors a single bonus after they receive an especially promising patent. Usually, the size of the bonus depends on the value of the invention. In some cases, it is related to the company's profits that year. In other cases, the bonus is a standard sum. Some firms give cash awards secretly to avoid jealousy among inventors who receive no awards or much smaller awards. On the other hand, many other companies publicize such awards as a way of giving the inventor recognition. One inventor declares, "I think it is a real mistake for a company not to publicize the awards it gives to its deserving employees. Usually, the resulting recognition is a lot more morale-boosting than is the money involved."
Lorenz: Even though we have award programs, our scientists are seldom secretive among themselves about their work
A few companies give monetary awards in the form of paid leaves of absence for as long as a year. The leave often enables the inventor to teach, do academic research, or travel. Most monetary awards are given as cash. Some firms, however, give the employee the alternative of receiving shares of company stock. Quite a few firms automatically give inventors a relatively small sum of money when a patent is applied for or granted. In the past, this "honorarium" or "token payment" was often a mere $1.00, which some recipients dismissed as "insultingly small." Now, the amount is usually about $50 to $250 or more. Some firms, such as Dow, give such token payments as a matter of tradition. Others do it to encourage the inventor to assist the patent department in drawing up the patent application. Other firms make the payment to compensate the inventor for signing the legal documents involved in filing the patent application. In the vast majority of cases, such payment is not required legally (although, in the past, some people assumed that it was). It is not a requirement because almost all industrial employees, when hired, relinquish the rights to any patents they may obtain while working for the employer. Some firms, such as Du Pont and Union Carbide, regard such payments as needless formalities. One company says that it discontinued making such "small symbolic gestures" about 10 years ago, after it discovered that giving a $1.00 payment to an inventor cost the company at least $25 in administrative expenses and the whole procedure was of very limited value. Nonmonetary awards, although usually not of great intrinsic value, provide the scientist with public and peer recognition. The types of nonmonetary awards or commendations given by employers to inventors are extremely varied. Some of these are: • Letter or certificate of commendation. • Pat on the back, or what is sometimes lightly referred to as an "attaboy." • Publicity about the patent in company publications and local newspapers. • Framed or leather-bound copy of the patent. • Mounted or imbedded silver dollar. • Plaque or paperweight. • Medal. • Tie clasp, cuff links, or other jewelry. • Award luncheon or dinner. • Increased freedom to attend scientific meetings or publish scientific papers. • Resort weekend. Vandenberg of Hercules says that one of the most appreciated honors is the freedom to work in scientific areas of one's choice. Another is the increased opportunity to attend scientific meetings. Many inventors prefer monetary awards to nonmonetary ones. An inventor observes, "At least with a monetary award, you can do with it what you want." Another says, "Obviously, a check for $1000 is a lot more useful than a congratulatory letter from the boss, no matter how beautifully worded." On the other hand, many inventors prefer not so much the award itself as the publicity and recognition that go with it. A chemist says, "I feel that the resulting recognition and esteem of one's peers is the greatest reward of all. Getting letters of congratulation from colleagues around the world because you've won some medal is a real high." Kirkland of Du Pont adds, "Peer recognition is very important to many professional people. Most employed inventors enjoy being 'stroked' by their supervisors." Actually, the cost of operating an awards program for May 26, 1980 C&EN
35
been blown out of proportion. Few inventors, they say, are in a financial position to commercialize their patent or are able to license it to another company. One of the biggest spurs to interest in recognition for employed inventors was the introduction in January 1970 of the Moss bill to require employers to pay their inventors additional compensation for inventions. The bill, in modified forms, also was introduced in subsequent sessions of Congress. It finally died, however, in 1978 after Moss did not run for re-election. Although the Moss bill had relatively little support in the House, it aroused considerable interest among U.S. employers and inventors. Among the scientific and engineering societies that took an active interest in the bill were the American Chemical Society and the Institute of Electrical & Electronics Engineers. In 1977, IEEE's Patent Task Force drafted an alternative to the bill. Last October, however, the task force decided not to push for such a bill because the group could not agree on some of its more controversial details. The Moss bill grew out of an increasing feeling in some At Dow Chemical, Malcolm E. Pruitt ( left) presents Herbert H.quarters that the employed inventor was not being Dow Medal to William C. Bauman, chemist and inventor compensated adequately. John P. Sutton, a patent attorney at Limbach, Limbach & Sutton in San Francisco, declares, "If an invention is valuable, the creator of it should get his fair share. He usually does not, and this company inventors is not great. About 80% of the comfailure contradicts the purpose of the U.S. patent syspanies responding to a recent survey said that such a tem." The main objective of this system, he explains, is program costs less than $50,000 a year. One research exto enable inventors to be rewarded for their creative efecutive comments, "This amount is truly modest, parforts, in return for disclosing their inventions to the ticularly in view of the substantial benefits derived." general public. A subject of continuing controversy has been whether organizations should release to the inventor a patent in To a large extent, the Moss bill followed the general which they have no commercial interest. Many companies format of a 1957 West German law, with certain modifiwill, if so requested. Others will not. Edwin H. Dafter Jr., cations to make it more acceptable in the U.S. It was inhead of Hercules' patent division, says, "If one of our troduced by Moss mainly at the urging of a coordinating committee of various ACS local sections in California, as employees develops, say, a new mousetrap, we probably well as several other professional groups. would waive our rights to it, since we would not be interested in manufacturing it. On the other hand, some The bill stated that an inventor should receive an large companies are so diversified that it is difficult for amount of financial compensation that represents "the them to decide whether a new but somewhat offbeat infair market value of the employer's exclusive right to the vention fits within their existing operations." invention, adjusted to reflect... the position and duties of the employee and the degree to which the operations Many firms say they want at least three years to decide of the employer contributed to the making of the invenwhether to turn the rights to a patent back to the invention." tor. For obvious reasons, inventors normally prefer to What this meant, in part, is that an employee who has have the decision made much more quickly—say, within a relatively high position in an organization should rethree months. ceive less compensation than one who has a lower posiSome observers argue that the whole controversy has tion, on the grounds that a highly placed person is likely to be in a primarily administrative job and less likely to have been intimately involved in making the invention. The bill also meant that a person whose normal duties do not include inventive work should receive more money than the person whose primary function is inventing. The Moss bill specified that the amount of added compensation to be paid the inventor should be agreed upon within three months after the patent is granted. If the employer and the employee cannot agree, the matter can be referred to a mediation board of the Patent & Trademark Office. The bill also provided that "when there has been a substantial change in the circumstances upon which the determination of compensation was based" (for example, if the invention proves to be much more valuable than originally anticipated), the employee may demand that a new compensation agreement be reached within three months. The Moss bill stirred up intense controversy. Among those who favored the bill was an attorney who argued, "While many corporations are fair and relatively benevolent, not all of them are so enlightened. Therefore, I Dafter: If one of our employees happens to develop, say, a new believe we need a mandatory system of compensation so mousetrap, we probably would waive our rights to it that each employed inventor will receive a fair shake." 36
C&ENMay26, 1980
Weatherproof mfiïches, from Johnson Wax polymers?
ΕΒΙΕΙ
Someday, neither wind nor wet will put out matches that could light up with a special Johnson Wax polymer coating. They would burn for several critical seconds anywhere. In any weather. I t ' s still a "someday" idea. But it may be some day soon. Someday, perhaps sooner than you think, other special polymers, in conjunction with other materials, might make cans bio-degradable, or help you brush an electricity-generating coat of paint on your home. Today, special Johnson Wax polymers work in such diverse applications as SPECIALTY coating matchbooks, improving printing
ink, and helping wall panels radiate electric heat. Such special polymers can make practically any thing you make—of metal, paper, plastic, fabric, wood or leather—look better, stand stronger, last longer or weather less. What can one of our special polymers help you do, right now? Only you can tell us. Then you'll see why our business is innovative chemicals for professional use. We are the Specialty Chemical Group, Worldwide Innochem Operations, Johnson Wax, Racine, WI 53403. We love a challenge. Call or write CHEMICALS us with yours.
ohnson max
We do much more than floors·
You're one step closer t o the perfect personal care product formutation with BASF Wyandotte. A unique way to give you the exact surfactant you need. Fast!
BASF Wyandotte gives you a broad range of over 100 different surfactants, covering the entire spectrum of applications and properties. We can provide custom surfactant formulations if necessary to meet your precise requirements. And our advanced research and development facility has made us an industry leader in cosmetic surfactant development. A wide selection of BASF Wyandotte surfactants are non-sensitizing, 100% active and nonionic. They add virtually no taste or smell, meet or exceed all new TSCA and FDA requirements, and provide the consistent quality you need for cosmetic toiletry and pharmaceutical formulations. Our exclusive Pluronic® Grid System saves you time, too! It identifies the surfactant you need . . . often in a matter of seconds. Whether you're developing a new cosmetic, or want to improve an existing formulation, we'll come up with the right answer, fast! Call toll free at 1-800-521-9100.
BASF Wyandotte Corporation Organic Specialties Wyandotte, Michigan 48192
Switch to Morpholine Why? Dependable Supply.
Conroe, Texas
Port Neches, Texas Morpholine is an extremely versatile chemical with many important applications. In fact, this versatility suggests many opportunities to substitute morpholine for other amines that may be less available or more costly. If supply is your concern before adopting morpholine in your formulations, don't worry. Texaco has plants on both sides of the Atlantic, located in Port Neches, Texas,
Llanelli, Wales Conroe, Texas, and Llanelli, Wales. Our morpholine capacity is one and one-half times the current world demand. And we're basic in diethylene glycol, the building block for morpholine. This means Texaco will also continue to be the most dependable supplier for all the established
[TEXAC^ Texaco Chemical Company
applications of morpholine such as intermediates in vulcanization accelerators, corrosion inhibitors, optical brighteners, emulsifiers, catalysts, pharmaceutical chemicals, bactericides, antioxidants and many others. In addition to our production capabilities, we're proud of our amine technology. Let us help. Texaco Chemical Company, Box 430, Bellaire, Texas 77401.
Employers contended, however, that their own organization's practices were entirely satisfactory, and they objected to government interference and cumbersome bureaucratic procedures in this area. They also stated that it is too difficult to determine fairly the amount of extra compensation to be awarded inventors and too difficult to decide who should receive such compensation. Galloway of Stauffer Chemical says, "There is no justification for establishing a law in this country mandating extra compensation for employed inventors. No evidence exists that such a law would encourage invention or innovation Since there is considerable room for diversity in such programs, each company should be allowed to tailor its program to its needs and objectives." Marcy of Research Corp. states, "To obviate the need for legislation in this area, employers should assume the responsibility for developing compensation plans that are acceptable to their employed inventors. Until this is done, the threat of legislation in this field will continue unabated." Although much discussed, the Moss bill actually never got off the ground legislatively. No hearings were ever held. In addition, no corresponding legislation was ever introduced in the Senate. Inventors themselves were too few and too poorly organized to work effectively on behalf of such legislation. A spokesman for the House Committee on the Judiciary, to which the Moss bill had been referred, comments, "Moss never really pressed very hard for it, partly because he was busy with other matters. Furthermore, no organized group outside of Congress strongly supported it. The issue, however, is still very much alive in Congress." He believes that no measure dealing solely with compensation for employed inventors will be introduced in Congress in the next few years. Rather, he says, the matter probably will be included in other bills relating to patents. In 1977, Rep. Raymond H. Thornton Jr. (D.-Ark.) introduced H.R. 8596, dealing chiefly with the rights of companies to inventions made as a result of research paid for by the federal government. The bill, which was never enacted, specified, among other things, that inventors under certain circumstances should receive special compensation for their inventions. This past March, Rep. Robert W. Kastenmeier (D.Wis.) introduced H.R. 6933 dealing with a variety of patent matters. Among other details, the bill states that the head of a federal agency may give monetary awards of up to $10,000 to an employee who makes a valuable invention. The amount depends partly on the extent to which the invention advances the state of the art. It also depends on the range of usefulness of the invention and the value of it to the government or the public.
In 1970, John E. Moss introduced a bill requiring employers to give added compensation to employees for their inventions
The first law to require that employed inventors be specially compensated for their inventions was enacted in 1897 in Austria-Hungary. When Austria became independent in 1918, the law was incorporated essentially intact into the laws of that country. Since 1910, the Netherlands has had a law requiring special compensation for employed inventors. The employer must pay the inventor an "equitable sum," depending on the monetary value of the invention and the circumstances under which the invention was made. The law atëo states that the right to such compensation cannot be nullified by an employment agreement. One Dutch observer states, "The fact that, during the past 70 years, there has been very little litigation dealing with proper compensation to Dutch inventors seems to show that, generally, employers and employees in our country find an amicable solution to this problem." The country that has most encouraged other nations to adopt laws to require special compensation for employed inventors is Germany. In fact, other countries commonly speak of having a "German-type law" governing such compensation.
Laws in foreign countries
About 20 foreign countries now have laws requiring that employers give special compensation to their employees when they receive an outstanding patent. Among these countries are West Germany, the U.K., Italy, Japan, Austria, Denmark, Norway, Sweden, Finland, the Netherlands, the Soviet Union, Poland, Hungary, and Czechoslovakia. Often in countries with an inventor-compensation law, the originator of an invention receives a lump-sum payment from the employer. In some countries, this payment later can be increased if the invention turns out to be more profitable than initially assumed. In some cases, the inventor may get a certain percentage of the annual sales of an invention.
Marcy: Unless employers develop compensation plans for inventors, the threat of legislation in this field will remain May 26, 1980 C&EN
37
The first German law went into effect in 1942. Designed to promote the German war effort and the nation's economy, it required that employed inventors be given monetary awards proportionate to the value of inventions from which the employer derives a profit or other benefit. In 1944, Germany, for the first time, established rules for computing "proper and adequate" compensation for its employed inventors. The West German law was rewritten in 1957 and amended in 1961 and 1968. It requires that the employer and the employee negotiate a reasonable compensation for the employee's invention. The size of the reward depends partly on the commercial value of the invention. It also depends on both the normal duties and rank of the employee, as well as on the extent to which the employer helped to initiate and develop ihe invention. If the employer and the employee cannot agree, the dispute goes to an arbitration board of the West German patent office. Over the years, this board has been called upon to arbitrate relatively few such employer-employee agreements. Willi R. Steckelberg, vice president of research at American Hoechst, says, "Generally speaking, German industry has learned to live with the German law and does not encounter major problems with it, although industry is not very happy about it. The main difficulties arise from the too-bureaucratic procedures and from the inventors' often incorrect opinions about the exploitability and value of their inventions."
Marcy of Research Corp. comments, "Experience with the German law and similar laws in other countries indicates that they are workable but that the cost of administering them is substantial. Moreover, there is no unequivocal evidence that such laws actually stimulate the development of new and useful inventions or their introduction into the marketplace." Britain has recently enacted a law governing compensation for employed inventors. The British Patents Act of 1977 states, among other things, that, if a patent is of outstanding benefit to the employer, the inventor has the right to apply for special compensation. The amount depends on the inventor's duties and the extent of his or her role (in relation to that of other empoyees and the employer) in making the invention. Under the law, the inventor is entitled to a "fair share" of the benefit that the employer has derived or may reasonably be expected to derive from the patent. The British law also states that an invention made by an employee belongs to the employer when it results from the duties for which he was employed or to which he had been specifically assigned. In all other cases, the rights to the invention belong to the employee. Why doesn't the U.S. have similar laws requiring compensation for employed inventors? Donald G. Manly, vice president of research and planning at Abex Corp., offers some explanations. Most employed inventors in the U.S., he says, feel they are satisfactorily rewarded by their salaries, promotions,
Companies follow a variety of practices in rewarding their exceptionally talented inventors Corporations use many techniques to reward employees who receive outstanding patents. Some of the recognition practices followed by six U.S. companies are: Du Pont compensates its inventors mainly through salaries and fringe benefits. It has a Special Compensation Plan to provide incentive for employees to exert their best efforts by rewarding them with extra compensation in the form of cash and/or Du Pont common stock. The program also is intended to attract and retain people who are unusually competent. Among the people eligible for this award are those who make "an invention or improvement or [find] an unusually ingenious solution to a business or technical problem that results in a profit, a saving, or other important benefit" to the company. Under this plan, Du Pont in 1979 awarded close to $1.18 million to 168 employees. The average such award last year was about $7000. Du Pont also has an Incentive Compensation Plan that rewards exceptional service with cash and/or company common stock. It recognizes employees who "have contributed most in a general way to Du Pont's success by their ability, efficiency, and loyalty." Last year, 10,890 Du Pont employees received a total of $84.4 million under the company's Incentive Compensation Plan. The average such award last year was about $7800.
38 C&ENMay 26, 1980
C. Edward Lorenz, director of research in Du Pont's central research and development department, says, "We have no lengthy laundry list of things we do routinely at Du Pont to recognize our inventors. Moreover, practices vary from one department to another." In some departments, the inventor receives a copy of his or her patent, decorated with ribbon and official seal, together with a letter of congratulation. Some departments give special dinners to staff members who receive patents. Inventors also are recognized by being given greater freedom to attend scientific meetings and to present or publish scientific papers. Outstanding scientists, including inventors, also may be recognized by being allowed to serve on company time as adjunct professors. Says Lorenz, "Our scientists welcome the opportunity to teach a course or two and thus become a part of the stimulating academic environment." Union Carbide gives monetary awards to inventors and others who make notable contributions to the company. Carbide rewards exceptional employee accomplishments with a merit increase in salary or a one-time cash award or both. A typical cash award might be 10 to 15% of an employee's annual salary. The company follows a range of practices in honoring inventors. An inventor who has received a patent is usually mentioned in one of the com-
pany newspapers. Inventors receive a letter of commendation from their supervisors. Inventors also may be awarded a desk memento, with the first page of their patent miniaturized in bronze. Periodically, inventors are honored with receptions and dinners. The monetary value of such recognition is relatively small, but Carbide believes it shows employees that it desires to encourage invention. Dow Chemical gives cash awards, usually amounting to one month's salary or more, to outstanding inventors and other qualified employees. Malcolm E. Pruitt, vice president of R&D at Dow, says, "We feel that, for many scientists, engineers, and others, the recognition is just as important as the money." Outstanding employees also may receive merit raises, promotions, or stock options. As a tradition, the company gives a token award of $1.00 to an inventor when a patent is applied for. The inventor gets a framed copy of the patent when it is granted. Dow scientists, including inventors, can be honored with the title "research fellow," which is the top rung on the company's research professional ladder. Last September, the company for the first time awarded the Herbert H. Dow Medal to six eminent company scientists to honor past research accomplishments and to encourage future inventive achievements. Plans for the years ahead
and various forms of personal recognition. Thus, most of them see no great need for government-mandated extra compensation. Manly believes that many European countries adopted German-type compensation laws for inventors partly to make laws throughout Europe more uniform. In many respects, he adds, company policies in Europe differ significantly from those in the U.S., partly because of differences in the histories and forms of government in Europe, compared to those in the U.S. American Chemical Society efforts
Among scientific organizations that have taken an interest in recognition for the employed inventor is the American Chemical Society. Its activities began in earnest in 1970, primarily because the Moss bill was introduced in that year. The ACS Committee on Patent Matters & Related Legislation (CPM&RL) began delving into the issue because it believed it might be called upon to take an official position on the bill. CPM&RL has sponsored symposia on compensation for employed inventors at ACS national meetings, has drafted resolutions on the subject for consideration by the ACS Board of Directors, and has investigated existing foreign laws. In 1974, in a joint effort with the ACS Committee on Economic Status, CPM&RL helped draft a one-sentence addition to ACS's Guidelines for Employers (now known
call for awarding at least one Herbert H. Dow Medal annually. Monsanto recognizes the achievements of its inventors partly by salary increases and promotions. John E. Maurer of Monsanto's patent department points out that inventors and other employees who do exceptionally good work are eligible for an Achievement Award, ranging from $1000 up to three months' salary. Inventors also may be given a bonus under the company's incentive plan for management and professional employees, which depends on job performance and on the company's profits. An outstanding Monsanto inventor also may be promoted to the company's science and engineering fellow program, which gives him unusual freedom in his work and considerable prestige. Hercules does not specifically award its inventors because such a practice, it feels, would discriminate against other employees who contribute to the company. Edwin H. Dafter Jr., head of Hercules' patent division, says, "Giving an award specifically to an inventor is unfair because it fails to take into account the valuable contributions of others in converting an invention into a commercial reality. After all, most modern-day, inventions are the result of team effort." The company gives Incentive Awards as lump-sum cash payments in amounts up to. $1500 for outstanding performance. Those who qualify, including
as the society's Professional Employment Guidelines). The statement, which has been included in the guidelines for several years now, reads, "Extraordinary contributions to patentable inventions, trade secrets, and knowhow should be compensated by specific rewards commensurate with the value of the contributions to the employer." The ACS Board of Directors in 1977 authorized the formation of a Task Force on Compensation for Employed Inventors, consisting of representatives from CPM&RL, six other ACS committees, and two divisions. This task force, chaired by Willard Marcy of Research Corp., has had as its main project the carrying out of an ACS-member survey dealing with compensation for employed inventors. How did patent-holding ACS members feel about the way their employers recognized their contributions? How much money did they expect to receive for obtaining a patent? What types of awards did they receive? Answers to these questions, the task force believed, would help ACS to decide what action it might take in the area of recognition for employed inventors. A survey questionnaire was mailed in February 1979. Probably the most significant question asked for the members' reaction to the statement: "On the whole, my employer has been fair in recognizing my contribution to this [latest] patent." Of employed inventors who replied, only 25% believed that their employers had been unfair (10% disagreed with
inventors, can receive as many as four of these awards a year. An employee's inventiveness, Hercules says, is one of the factors that it considers in granting salary increases and promotions. The company also recognizes its inventors in its in-house publications. The company occasionally has honored inventors by naming a product after them. Hercules' wet-strength resin for paper, tradenamed Kymene, was named after chemist Gerald I. Keim, who invented it. A Hercules resin for printing inks called Petrex was named after chemist Ernest G. Peterson. As one observer points out, "Such recognition does not help pay the grocery bills, but it obviously is gratifying to the inventor." International Business Machines for more than 18 years has had various award programs to recognize the individual achievements of its employees. William J. Turner, manager of research staff operations at IBM, explains, "Our awards are independent of pay and other compensation. They are intended as company responses to particular achievements above the expected levels of performance." Many of the people recognized are inventors. IBM's Invention Achievement Award is given to encourage employees to develop ideas that may be patentable. According to the award procedure, inventors receive three award points when their patent application is filed with the
Patent & Trademark Office. When an invention (whether patented or unpatented) is accepted for publication in IBM's Technical Disclosure Bulletin, the inventor gets one point. When inventors accumulate 12 points, they receive an Invention Achievement Award of $2400. IBM also gives Outstanding Innovation Awards to employees who develop especially valuable patentable or unpatentable innovations. The company gives about 40 such awards a year in amounts ranging from $2500 to $10,000. Says Turner, "Our awards program is successful because our top management gets involved not only in the review process but in the presentation of the awards. For example, our Outstanding Innovation Awards are presented by our director of research at a special luncheon. We also make sure that the awards are publicized, so that the recipients get proper recognition from their associates." Not long ago, IBM made a survey of what its employees think of its awards program. It concluded that the employees appreciate the program and value whatever awards they receive. One inevitable problem, however, is that, despite the company's determined efforts to give awards fairly, some people who fail to receive them (particularly those who were part of a group effort) are bound to be disappointed. But better luck next time!
May 26, 1980 C&EN 39
Sales are not a factor in inventor-award plans
Most honoraria are about $50 to $250
Company annual sales, 1976, $ millions
Amount given each inventor
0 to $499 $500 to $999 $1000 to $1999 $2000 to $2999 $3000 to $4999 $5000 or more
% firms having inventor-award plan
70% 48 41 78 75 59
% of companies
$50 or less $51 to $150 $151 to $250 $251 to $500 More than $500
8% 27 28 24 13
Inventor-award programs are most prevalent in the aerospace industry % firms having inventor-award plan
Industry
Aerospace Electrical Petroleum Basic metals Mechanical Source:
100% 75 67 67 63
Industry
% firms having inveittor-awsrd p i r n
Chemical Electronics Pharmaceutical Others All industry
56 56 22 55 58
1978 survey by Association of Corporate Patent Counsel
the statement strongly, 15% disagreed with it moderately). On the other hand, 75% felt that their employers had treated them fairly (41% agreeing moderately and 34% agreeing strongly). Inventors who received some form of recognition, however small, were much more likely to regard their employers as fair. Among inventors who received no recognition, 37% thought their employers had been unfair. Only about 10% of inventors who received some recognition regarded their employers as unfair. Most financial awards, the survey shows, are (or have been) mere tokens. Two thirds of the respondents expected to receive less than $5.00. Respondents received or expected to receive a variety of awards. Some 31% received or expected to receive recognition from their employer; 17%, a monetary award
or bonus; 8%, a medal or plaque; and 11%, a change in job assignment or favorable consideration for a promotion or salary increase. But 49% expected "none of the above." (The figures add up to more than 100% because some received or expected to receive more than one reward. A reply of "none of the above," too, could mean no award or an award other than the ones specified.) Among the employed inventors, 94% said that they had signed an agreement assigning their patents to their employer. Only 4% had not signed such an agreement, and 2% did not know. And only 1% had had returned to them the rights to their latest patent. Among the ACS task force's conclusions were: • About 25% of the employed ACS members who hold patents believe that they have not been adequately recognized by their employers. • More employees would feel that they were being treated fairly with respect to their inventions if their employers made "a relatively modest investment in recognition and awards." • The major factor affecting employees' belief that they have been treated fairly regarding their patents is recognition by their employers. This recognition can take a number of different forms, not solely monetary. « Federal legislation in this area is not needed now. In 1978, the Association of Corporate Patent Counsel (ACPC) surveyed the inventor-award plans of 142 U.S. companies. The survey defined inventors as people named on a patent application. The plans dealt with were separate from general programs for rewarding outstanding employee performance. Of the companies that participated, 58% had award programs specifically for inventors. According to a similar ACPC survey in 1972, only 48% of the companies had inventor-award programs. In the chemical industry, 56% had such programs in 1978, up from 40% in 1972. About 44% of the companies with inventor-award plans gave discretionary awards of as much as $5000 or more to scientists whose inventions were of unusual benefit to the company. Are inventor-recognition programs really effective in making inventors more productive? Many corporate executives have an intuitive feeling that such programs are useful, but they find it impossible to prove. Charles F. Larson of the Industrial Research Institute comments, "Most organizations have not evaluated the effectiveness of their recognition programs. They assume that people appreciate being recognized. But whether this translates into making inventors more inventive is still undetermined." Bruce E. Franklin of Carbide says, "No one knows whether recognition leads to beneficial results. As a general principle, however, I believe that recognition does motivate people. Of course, some people prefer money; some prefer praise from the boss. So, at Carbide, we make every effort to tailor the award to the individual." C. Edward Lorenz of Du Pont declares, "It is impossible to measure quantitatively the effectiveness of a recognition or awards program for inventors. I feel, however, that, if we did not have such a program, we would probably see fewer significant innovations, fewer enthusiastic scientists, and a higher attrition rate among our R&D staffs." D
Reprints of this C&EN special report will be available at $3.00 per copy. For 10 or more copies, $1.75 per copy. Send requests to: Special Issues Sales, American Chemical Society, 1155—16th St., N.W., Washington, D.C. 20036. On orders of Franklin: As a general principle, I believe that special recognition $20 or less, please send check or money order with request.
does motivate people to exert greater effort 40
C&EN May 26, 1980
