The competitive advantage of your company lies in its intellectual property. However, the intricacies of IP law can be quite challenging, and these challenges increase significantly when dealing with international boundaries.
When expanding your team or hiring in the Czech Republic (Czechia), it is crucial to safeguard your company's inventions, designs, trademarks, copyrights, creative activity, and trade secrets from being claimed or exploited by others. However, navigating the complex landscape of IP rights in the Czech Republic can be challenging, as they are governed by both Czech law and European Union regulations. Failing to protect your company's IP rights and ownership can result in expensive legal conflicts, loss of market share, and harm to your brand.
Explore our guide for valuable insights on safeguarding your company's IP rights and ownership. Please note that while our primer aims to provide information, it does not constitute legal advice.
1. NDAs are enforceable in the Czech Republic
In the Czech Republic, non-disclosure agreements (NDAs) have traditionally been recognized by the courts as valid and binding contracts. However, it is important to be aware of these stipulations and limitations:
- The NDA must be in writing.
- The terms of the agreement must clearly outline the subject matter covered.
- The agreement should explicitly specify the parties to whom it applies.
- Certain information can't be covered by an NDA. For example, a company can't make employees sign an NDA to stop them from exposing criminal activity by the company.
2. But NDAs aren’t enough to govern your ongoing relationships with employees and contractors
An NDA is a good place to begin. It covers:
- How your firm's IP, information, and assets can be used,
- Who has access, and
- How long they have access.
But NDAs are not intended to regulate an ongoing contractor or employment agreement with someone involved in the creation and development of your company's IP. In simpler terms, NDAs protect existing IP and protected information at the time of an employee or contractor's hiring. NDAs don't cover IP and protected information the employee or contractor helps create during their tenure. Depending on the circumstance, an IP assignment agreement may be required. In some jurisdictions, these are known as Proprietary Information and Inventions Assignment Agreements (PIA or PIIA). IP assignment agreements are legally binding contracts that also protect confidentiality.
For example, in the case of inventions created by an employee/contractor, the right to the patent is automatically transferred to the employer—unless there is an agreement in place regarding the employee’s ownership. In the case of the Czech Republic, the inventor must notify the employer of the invention. The employer has three months to claim ownership, if not, the right to patent returns to the employee/contractor. Not sure if you’re categorizing your workers correctly? Avoid misclassification with our essential guide.
3. IP assignment agreements are enforceable
To ensure legal protection and enforcement of your IP rights in the Czech Republic, it is necessary to follow local law and international regulations. The Czech Republic is a member of the World Trade Organization (WTO) and the World Intellectual Property Organization (WIPO—which administers the Paris Convention). The Czech Industrial Property Office administers IP protection within the country.
In general, IP assignment agreements are enforceable in the Czech Republic. Some types of IP affect the implementation/requirements of an assignment agreement.
- According to the Czech Copyright Act, an employee who creates a work is considered to be the author.
- A determination must be made as to whether the work is part of the employee or contractor’s job. The work should be clearly defined in the work contract. Examples of these types of work include written material (book, article, or manual), photographs, graphics, slogans, and computer programs. The employee maintains minor rights (they can claim authorship) and the employer is granted ownership rights.
- The employer can assign rights to a third party only with the consent of the author. This condition should be included in the employment contract as this permission is binding for future assignment of rights. An exception is made in cases where the employer's business (or portion) is sold.
- If an employee creates work that has no connection to their job it will not be considered employee's work in the context of the employment contract. The employer cannot use it without the employee’s approval. Content created outside of an employment contract is granted automatic copyright protection without the need to register.
- If an employee's work leads to significant commercial success, beyond what is reasonably compensated, the employee may have the right to claim additional fair compensation. However, this right can be waived in the employment contract. This does not apply to databases and computer programs.
For patent rights:
The Industrial Property Office oversees patents in the Czech Republic (based on Act No. 527/1990 as amended). Note that the Czech Republic is also a member of the European Patent Organization (EPO). This is what you need to know:
- The patent application can be filed by the inventor or by someone who has been assigned the right to do so from the inventor.
- In the case of an invention created by an employee, the right to a patent automatically belongs to the employer, unless stated otherwise in the contract.
- The employee must notify the employer of the creation of the invention.
- The employer is responsible for exercising the right to a patent within three months of notification.
- If the employer does not exercise the right to a patent within three months, the right to patent reverts to the employee who created the invention.
- Both the employer and the employee must keep the invention confidential and prevent its disclosure to third parties.
For industrial design ownership:
The Industrial Design Act states that industrial property rights belong to the designer or their legal successor. If there are multiple co-designers, each co-designer has the right to the industrial design in proportion to their contribution to its creation. In the case of industrial design created by an employee or contractor:
- If a designer creates an industrial design as part of their employment, the right to the design will belong to the person or entity who commissioned the design, unless stated otherwise in a contract. The designer's right to authorship will not be affected.
- The designer must inform the employer in writing and provide the necessary documents for evaluating the industrial design.
- If the employer does not claim the industrial design within three months of notification, the rights revert back to the designer. Both the employer and designer are required to keep the design confidential. If the rights return to the designer, the employer must maintain confidentiality for an additional month.
- If the designer creates an industrial design in their employment and the employer claims it, the designer is entitled to fair compensation from the employer. This compensation should consider the value of the design, the employer's contribution to its creation, and the designer's assigned tasks. If the compensation already paid is significantly disproportionate to the benefits gained from later use or application of the design, the designer can request additional compensation.
- These rights and obligations continue even after the termination of the employment contract.
4. Contractors own the copyright to their work unless you override this in a written agreement
Under Czech copyright law (the Copyright Act - No. 121/2000 Coll, as amended), employers have the right to control the work created by their employees during their employment. For work created by contractors, the contractor grants a license to the client. Unless agreed otherwise, the contractor is still allowed to license the work to others as long as it doesn't conflict with the client's legitimate interests.
5. You have to localize IP ownership clauses to the Czech Republic
Czech and European Union (EU) intellectual property protection laws differ from those in other countries, including the US. For example, international agreements protect most copyrighted works created in the US. But, because the Czech Republic doesn't employ the US "work for hire" concept, in most cases IP created in the Czech Republic is owned by the creator. Trademarks, designs, and patents need protection specific to the Czech Republic and/or the European Union.
6. Unlike in some counties, the moral rights of an author cannot be transferred or waived
In the Czech Republic creators of works are granted moral rights, which include the right to preserve the integrity of their work and be acknowledged as its author. Unlike some other counties, moral rights are non-waivable and non-assignable—to attempt to do so is illegal. Moral rights cease to exist upon the author's death and no individual can claim authorship. The work may only be used in a manner that retains its value and the author's name must be attributed. The protection of moral rights can be obtained by individuals close to the author even after the expiration of the copyright.
Frequently asked questions about IP law in the Czech Republic
Who owns IP in the Czech Republic: employee or employer?
Generally speaking, the employer owns IP in the Czech Republic. However, depending on the format of the IP, different regulations come into play. Not only that, you have to be proactive in some situations. For example, with regard to patents and industrial design, there is a three-month window to exercise your rights otherwise the rights revert to the inventor or designer. Unless agreed otherwise, the contractor can license work to others as long as it doesn't conflict with the client's legitimate interests.
What is a CIIA agreement?
CIIA stands for Confidential Information and Invention Assignment. This is just another name for a Proprietary Information and Inventions Assignment (PIIA). Some other names this type of agreement may go by include:
- Employee Confidentiality and Inventions Assignment Agreement
- Proprietary Information Agreement
- Employee Intellectual Property Assignment Agreement
- Protection of Company Interests Agreement
What is a PIIA agreement?
A Proprietary Information and Inventions Assignment Agreement (PIIA) is a legally binding contract that sets out the ownership and protection of intellectual property created by an employee or contractor during their work engagement with a company.
Are PIIAs and NDAs the same thing?
No. NDAs generally apply to IP and protected assets that already exist at the time the contract is signed.
In some jurisdictions, PIIAs apply to IP and protected assets the employee or contractor creates during their employment or work arrangement. In the Czech Republic, an assignment agreement is used.
What is an IP assignment agreement?
An intellectual property assignment involves the transfer of an owner's rights, title, and interest in specific intellectual property rights. The party transferring the rights relinquishes their ownership of intellectual property rights, such as patents, trademarks, industrial designs, and copyrights, to the party receiving them.
Which Czech and EU agencies deal with IP?
Agencies you should be familiar with are:
- Patent Office of the Czech Republic: For matters regarding patent law and patent protection in the Czech Republic. Located in Prague.
- The European Patent Office: For applying for patents across multiple EU member states (including neighboring countries like Slovakia, Germany, Austria, and Poland). Headquartered in Munich, Germany.
- Industrial Property Office of the Czech Republic: For the registration of trademarks and the maintenance of records for all domestically registered trademarks, as well as international registrations designating the Czech Republic. Located in Prague.
- European Union Intellectual Property Office (EUIPO): For EU-wide trademark protection. Located in Alicante, Spain.
Are IP regulations the same as in the US?
No. IP is protected differently in the Czech Republic than in the United States. If you’re hiring contractors or employees in the Czech Republic, you need to protect your IP assets under national law. That said, some US-copyrighted works are protected in the Czech Republic because of international copyright agreements.
Can I protect my trademark in the Czech Republic?
Yes. A trademark registration application can be filed by both natural and legal persons at the Industrial Property Office. The office will determine if the application is eligible for protection. If approved, the trademark rights holder obtains the exclusive license for 10 years (which can be extended).
What’s the difference between an invention and a utility model?
A utility model is often seen as a simplified version of an invention, protecting new and industrially applicable technical solutions that surpass ordinary professional skills. The principles governing the right to protection and the application process for a utility model are similar to those of an invention application.
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Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.