Agreements between employers and employees

For patentable inventions developed by an employee, the Act on the Right to Employee’s Inventions applies in Sweden, unless other agreements have been made (Law 1949:345, LAU).

Act on the Right to Employee’s Inventions (external website)

The law examines the rights and obligations of employers and employees when an invention has been created during an employment relationship. The employer's rights to the invention vary depending on, among other things, work tasks and how closely the invention is related to them.

In order to ensure that innovations, technical solutions, computer programs or other intangible assets arising from the employee's work are accrued to the employer, it should be regulated in an employment contract.

Collective agreements

Sometimes intangible property rights can be regulated in collective agreements. For example, there is the Inventor's Agreement for the private sector, which regulates employee’s rights to inventions. It is therefore useful to examine whether the Inventor's Agreement applies and whether it is sufficient before drawing up a specific agreement.

Consultants and trainees

Today there are many forms of commissions.  It is common for companies to hire consultants to carry out projects for a limited period of time. Consultants are often not regarded as employees by the renting company. It is therefore unclear whether the employer's right to intangible assets applies. It is most likely the company that hires out the consultant that is considered the employer.

This means that a hired consultant could work at a company to develop an internal IT system and when the work is completed, ownership is accrued to the consultant or the consultant's employer. The renting company would then be dependent on the consent from the consultant or the consultant's employer to use the IT system.

The same applies when trainees are accepted into a workplace and where no agreement is made on what will happen to intangible assets that trainees are involved in creating. Trainees are not normally employed by the company and are therefore not covered by the Act on the Right to Employee’s Inventions. Here too the legal situation is unclear. It is therefore important to agree on intangible assets and rights in order to avoid ambiguities and future problems.

Agreements are useful in collaborations between companies

Often it is successful collaborations that lead to new innovations. It may be inventions, services or other products to be introduced on the market. In collaborations, it is important to make it clear from the outset in an agreement what applies to all participants. This is especially important when it comes to intangible assets, as they often generate very high revenues in the company.

Frequently asked questions to agree on tend to be future profits, duties, expenses, trade secrets and special skills. But even questions about copyrights that arise in the collaboration and the right to be named are important things to have considered from the beginning. These questions need to be asked and agreed on at an early stage, as the law is often not enough to resolve a conflict over ownership. 

An example:

Two or more companies enter a cooperation with the goal of finding a technical solution to a problem. All parties contribute information, ideas, results, ideas and more. After some time, a technical solution has been found, i.e. an invention, and there are good conditions for applying for a patent on the invention.  There may be questions about how the cooperating companies will proceed with the invention.

How a cooperation agreement is designed

Exactly how to choose to draw up an agreement is up to the cooperating parties. A common approach is to write a comprehensive cooperation agreement that outlines the major guidelines for the cooperation. In connection with the cooperation agreement, a subsidiary agreement can then be signed which regulates in more detail issues relating to assets and rights arising during the course of the cooperation.

How an agreement is designed depends on the purpose of the cooperation. For example, when faced with patent cooperation, the following questions are common:

• Can a shareholder decide to license the invention to a third party without the consent of the other partners? Should the other shareholders be compensated?
• Can another shareholder use the invention in their business without the consent of the other partners? Should other shareholders benefit from the proceeds of the invention?
• How are costs for the patent allocated, such as annual fees?
• If one suspects that a third party is infringing on the patent, how should work be initiated to prevent it? If there are costs for legal expertise and legal process, who will pay?

Non-disclosure agreements

When entering partnerships or projects, a confidentiality agreement should be drawn up to ensure that valuable skills and sensitive information are not distributed in an uncontrolled way, thus destroying the outcome of the cooperation.
Confidentiality agreements usually regulate four areas:

• Definition of the confidential information: A description of the information to be kept confidential The section can also define the type of information that should not be considered confidential.
• Use: Describes how the parties may use the information.
• Limitation of the way the information may be passed on: There may be a need for the parties to share the information with others, such as employees or consultants. The confidentiality agreement must be clear how this can be done.
• Period of validity: Regulates the duration of the non-disclosure agreement. 

It is not uncommon for other types of contracts, such as employment contracts, to contain clauses that also regulate confidentiality. If you feel that such a clause is considered to be fully adequate, there is no need for a separate confidentiality agreement.

Examples of content in non-disclosure agreements

License agreement

License agreements can be very important for a company's profitability. With a license, you can grant someone else the right to use all or parts of the exclusive right that an intangible property entails. It is usually referred to as the licenser granting exclusive rights.

There are companies whose business strategy is to develop new innovations, register them and then license them out. Instead of building a business around innovation, revenue comes through royalties or other types of licensing fees.
In a licensing negotiation, it is important that the limits of the license are clear. A licensing agreement should at least regulate four key areas:

• Time: For how long should the license agreement be valid?
• Place: Is the license limited to any particular country or region?
• Disposal: How should the invention be used? Manufacturing, offering, use, in which industries?
• Competition: What opportunities does the licensee have? Is it a simple or exclusive license? (With a simple license, the licensor may exercise the right for themselves or license to another party as well. With an exclusive license, the licensee has exclusive rights to exercise the right.)

Expertise may be needed for licensing agreements

Licensing agreements can quickly become complicated and extensive. Therefore, it may be a good idea to use expertise for a license negotiation. Those who enter into licensing agreements should at least be aware of the following:

• The law of contracts: What obligations arise from the agreement?
• The intangible property rights: What type of right is licensed? How long is the protection time for the right? 
• Private international law: Is it an international license agreement? If so questions may arise as to which country's law and court apply to the agreement? 
• The competition law: How is the use of the intangible property right limited?

Learn more about asset licensing

Help in signing agreements

Writing an agreement that includes your intangible property rights may be complicated. That is why it is good to get help.

Find a lawyer or a legal practitioner to sign a contract