Summary
The post examines the multifaceted incentives required to encourage inventors to innovate, based on a study showing limited impact of financial rewards alone. It details key components of an effective incentive mechanism: recognition, positive work environment, favourable personnel treatment, and financial benefits. The discussion covers practical methods for implementing these incentives within organisations, along with legal considerations such as proper inventor naming in patents. The conclusion underscores the need for a balanced, sector-specific incentive structure tailored to a company’s goals and inventive activities.
This post was first published on February 7, 2010.
In one of my earlier posts entitled, ‘Why do inventors invent?’, I provided the results of a study on inventor incentives carried out by us. It can be noted from the results that a very small percentage of the inventors expressed that financial incentives encourage them to invent. The learning from the study is that an incentive mechanism must include incentives other than financial in order to encourage inventors to invent. Having said that, the issue with respect to it is that incentives that encourage an inventor such as love of invention, desire to improve and so on cannot be easily provided by an organisation.In the light of limitations with respect to incorporation of certain incentives, an incentive mechanism must have the following components in order to encourage inventors to invent and to co-operate in protection and enforcement of inventions:
a. Recognition/Fame;
b. Conducive working environment;
c. Favourable personnel treatment; and
d. Financial rewards.
a. Recognition/Fame
Recognition of inventors for their inventions plays a very important role in encouraging them to invent. The first step towards recognizing inventors is naming the right inventors in the right order in a patent application. The names of inventors in case of joint inventorship must be in the order of their importance. Naming persons who are not inventors in a patent application may disincentivize a true inventor. Furthermore, naming a person, who is not an inventor in a patent application can also be a ground for patent invalidation.
b. Conducive working environment;
c. Favourable personnel treatment; and
d. Financial rewards.
a. Recognition/Fame
Recognition of inventors for their inventions plays a very important role in encouraging them to invent. The first step towards recognizing inventors is naming the right inventors in the right order in a patent application. The names of inventors in case of joint inventorship must be in the order of their importance. Naming persons who are not inventors in a patent application may disincentivize a true inventor. Furthermore, naming a person, who is not an inventor in a patent application can also be a ground for patent invalidation.
Various companies have adopted different recognition schemes for encouraging inventors. Some of such successful schemes include,
i. Giving recognition on filing and grant of a patent;
ii. Giving recognition to inventors on reaching certain milestones with respect to number of patent filings or grants; and
iii. Appropriate recognition of inventors for valuable patent grants based on objective assessment such as revenue from a patent and so on.
Recognition is generally given by companies in various ways such as
i. grant of certificates or other articles for inventors;
ii. Writing names of inventors on special bulletin boards;
c. organizing dinners on the name of an inventor;
d. giving special privileges and so on.
b. Conducive working environment
i. Giving recognition on filing and grant of a patent;
ii. Giving recognition to inventors on reaching certain milestones with respect to number of patent filings or grants; and
iii. Appropriate recognition of inventors for valuable patent grants based on objective assessment such as revenue from a patent and so on.
Recognition is generally given by companies in various ways such as
i. grant of certificates or other articles for inventors;
ii. Writing names of inventors on special bulletin boards;
c. organizing dinners on the name of an inventor;
d. giving special privileges and so on.
b. Conducive working environment
Amicable environment and facilities for carrying out research and development plays a critical role in encouraging inventors to invent. Despite any other kind of incentive, it has been proved that an inventor will be interested in working on inventions only if appropriate environment that encourages out of the box thinking is made available to the inventor. Companies such as Google, are known to focus on providing environment and facilities that allow inventors to think laterally and thereby generating path breaking inventions.
c. Favourable personnel treatment
An inventor must be given special treatment in personnel affairs in order to encourage him to invent. In addition to giving flexibility with respect to mode of working,timings and so on, creation of inventions must form part of employment assessment metrics for promotion, salary appraisal and related matters. Such incentives play a very important role in not only retaining an inventor but also in encouraging the inventor to invent.
An inventor must be given special treatment in personnel affairs in order to encourage him to invent. In addition to giving flexibility with respect to mode of working,timings and so on, creation of inventions must form part of employment assessment metrics for promotion, salary appraisal and related matters. Such incentives play a very important role in not only retaining an inventor but also in encouraging the inventor to invent.
d. Financial benefits
Though financial gain has been voted as a basis for encouraging inventors to invent, it plays a very important role in soliciting inventor co-operation in protection and enforcement of inventions. Financial incentives have also been proved to help in excavation of inventions in a company. Therefore, it is important to have financial incentives as part of an inventor incentive mechanism. Generally, companies provide incentives at two stages, at filing stage and at grant stage. The financial incentive is always higher at the grant stage than at the filing stage. Such incentives may also be provided during prosecution stage and after grant based on the performance of the patent. In some countries, providing financial incentives to inventors is mandated by law.
Though financial gain has been voted as a basis for encouraging inventors to invent, it plays a very important role in soliciting inventor co-operation in protection and enforcement of inventions. Financial incentives have also been proved to help in excavation of inventions in a company. Therefore, it is important to have financial incentives as part of an inventor incentive mechanism. Generally, companies provide incentives at two stages, at filing stage and at grant stage. The financial incentive is always higher at the grant stage than at the filing stage. Such incentives may also be provided during prosecution stage and after grant based on the performance of the patent. In some countries, providing financial incentives to inventors is mandated by law.
Conclusion:
A well-designed incentive mechanism integrates all the aforesaid kinds of incentives and tailor makes them to suit the company’s invention promotion goals. While the aforesaid incentives are very important, other kinds of incentives may also be incorporated while devising a mechanism. The kind of incentives to be incorporated and the role of such incentives will generally be based on the field or sector of the company. For example, an incentive mechanism for a biotech company must be different from that of a software company because of difference in factors such as gestation period and shelf life of an invention in the said sectors.
To conclude, in order to encourage inventors to invent, every organization must have a well designed inventor incentive mechanism in place. All kinds of incentives provided under the mechanism must be well balanced in the light of the organisation’s goals. Any imbalance can be counter-productive to promotion of inventions in the organisation. The specific balance suitable for a company may be created only after studying the organization structure, its technology processes, nature of inventive activity and so on in the company.
