The Compensation and Royalties Committee ("Committee") confirmed the validity of agreements under which an employee waives its rights to royalties in connection with service inventions, the development of which the employee participated during the course of its employment.

The case at hand involved an employee who had been involved in the development of six inventions during the course of his employment, all of which were ultimately registered as patents in the employer's name. The employee and his employer had entered into various agreements dealing with these inventions:

  1. Confidentiality Undertakings in which the employee waived his property rights to the inventions, transferring these rights to his employer.
  2. Assignment of Patent Rights, in which the employee transferred his invention rights that were registered as patents to his employer.
  3. Waiver of Claims, signed upon the termination of the employee's employment, in which the employee waived all current and future claims against his employer, including all financial and tortious claims.

The Committee held that as a general rule, an employee is able to waive its rights to royalties, and that an agreement between an employee and employer negating the employee's entitlement to remuneration is valid. Consent to such an agreement may be in writing, orally or through conduct.

Regarding the case at hand, the Committee examined the three types of agreements into which the employee had entered.

The Committee held that neither the Confidentiality Undertaking nor the Assignment of Patent Rights waived the employee's right to royalties.

In contrast, the Committee held that the Waiver of Claims, in which the employee waived all future rights of action against the Company, was evidence of the employee's explicit intention to waive his right to royalties for the service inventions and represented a valid waiver. That the employee was not aware at the time of signing what future rights he might be waiving was not invalidating in and of itself. Therefore, the Committee held that the employee was not entitled to royalties according to the Israeli Patents Law.

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