Dear Clients, Colleagues and Friends,

On December 1, 2019, the Israeli Supreme Court rejected a petition by Dr. Ruth Levy against a decision of the Compensation and Royalties Committee in the Ministry of Justice (the “Committee”) under Section 134 to the Patents Law, 5727-1967 (the “Patents Law”). The Committee had rejected, in limine, Dr. Levy’s motion to receive remuneration for a service invention from her former employer, Teva Pharmaceuticals Industries Ltd. (“Teva”), the other respondent to the petition, due to the expiration of the proscription period.

The Supreme Court’s ruling has provided, for the first time, a concrete answer to an issue which troubled Israel’s Hi-Tech industry (as well as the more conventional industries), regarding an employee’s right to remuneration for service inventions (inventions invented by them or in which they participated during and as a consequence of their work). The Supreme Court ruled that employees have no “vested right” under Israeli law to receive remuneration for their inventions, and that where there is no actual agreement between the employer and the employee determining whether, to what extent, and on what conditions the employee has a right to remuneration for a service invention, the employee can apply to the Committee for a decision on the matter.

On the operative level, our recommendation is to continue to require a proper contractual arrangement with any employee who participates in R&D or takes part in the development of a company’s technology, including an explicit waiver of any additional remuneration or compensation. It should also be noted that the Supreme Court’s ruling renders redundant any concerns that a company’s patent remuneration policy may be used as an indication of the employee’s right to receive additional compensation as a consequence of the commercialization of the invention.