Volume 7, Number 4, Page 3

Employment Complaints over Employee Inventions

By Juan Levario-Gebbia

Employer

In Mexico, companies are increasingly looking to their employees for new ideas on ways to improve business practices. Yet, as Mexican employees have certain unwaivable rights in regard to their ideas and inventions, a growing number of cases are being filed before local labour boards by employees claiming to have been unfairly compensated for their innovations. Therefore, employers must carefully examine their compensation practices in these circumstances in order to reduce possible exposure to future litigation.

Background

Under the Article 163 of the Mexican Federal Labour Law ("FLL"), an employee who develops any idea or invention is entitled to receive a "complementary compensation" to his or her salary, so long as research and development are activities considered to be within the scope of his or her position. The FLL further provides that if any employee invents something and the employee has not been hired to perform activities of development or research, the employee is the sole owner of the invention. Therefore, the employee would acquire all corresponding rights of ownership in this instance.

Employees have maintained these rights under the FLL since 1970. However, they have only recently become a growing concern for employers in Mexico, as companies strive for new ways to become more competitive and have begun implementing Total Quality structures. Within these types of structures, all employees have the opportunity to suggest ideas to improve management, production procedures, and cost reductions. As this trend continues to grow, so does the risk for litigation. For example, in January of 1999, the Mexican Federal Court reversed a local labour board's decision and ordered an employer to pay the equivalent of US$560,000, declaring that the employee had rights of exclusive use over an invention developed during the course of business. The decision was the first "employee victory" in Mexico of what may be a growing number of similar cases filed before local labor boards.

Protecting A Company

An employee's rights regarding inventions (as all labor rights in Mexico) cannot be waived, nor can a company avoid the corresponding complementary payment if a bona-fide claim is made. However, the FLL does allow employers and employees to regulate their specific rights over inventions and over complementary payments. Therefore, in order to reduce the risk of complaints and subsequent awards, employers must recognize their employees' rights to such benefits and establish a fair complementary compensation policy.

Employers are well served to determine the best policy to implement with its own workforce, as the specific details may vary dramatically. The key, though, is to take preventative measures designed to minimize possible future exposure.

Conclusion

As companies look to develop new and innovative procedures to become more competitive, they must also take careful note of how those procedures - and their development - affect their workforce. Otherwise, in the midst of traditional practices, an employer may find itself at the heart of non-traditional employment claims in Mexico.

This article first appeared in the January 2000 Edition of The Global

Juan Levario-Gebbia is an attorney with Baker & McKenzie in Juarez, Mexico.