Unlike many other countries, Germany has an employee invention law which provides for a formalized procedure concerning inventions of employees. It is the inventor's duty to formally communicate the invention to the employer, on the one hand, and it is the employer's duty to formally claim ownership in the invention within a certain time period, on the other hand. If this procedure is complied with, the inventions of employees may be transferred to the ownership of the employer who is entitled to file for a patent and may exploit the invention. The law requires that the employer compensates the inventor by paying a remuneration which is to be determined on the basis of a method described in the law.

The most significant pitfall of this system is the above mentioned period within which the employer must claim ownership to the invention. If this claim is not made in time, the employee is regarded to be the sole owner, and is entitled to a reasonable royalty for the use of his or her invention.

The inventor and the employer regularly need professional assistance for determining the before-mentioned remuneration for the invention correctly. When the amount is disputed, the parties may take the opportunity of obtaining an official proposal for settlement by the Arbitration Board for Employee Inventions at the German PTO. In most cases the parties accept the proposals of this Arbitration Board as a settlement. Only few of these cases are litigated before the civil courts.