Intellectual Property in Luxembourg

By Thierry Bovier, Bernard David, Pierre Kihn and Olivier Laidebeur

Every company creates intellectual property but without always realising it. In today’s knowledge-based economy, intellectual property is a strategic and essential asset that ensures the development and durability of a company. It is important to protect this asset by creating registered intellectual property rights.

Intellectual Property in Luxembourg sets out the legal aspects and tax advantages, together with practical action points on how to implement an intellectual property strategy within a company. The book explains the tax and other advantages of Luxembourg, a place where innovation and entrepreneurship are valued and encouraged.

Readers can use this as a practical guide to fully optimise the management of their IP rights.

• Language: English
• Publisher: Éditions Larcier
• Release date: Jun 4, 2019
• ISBN: 9782879984322

Book preview

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© ELS Belgium s.a., 2019

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All rights reserved.

No person shall, except with the prior written permission of the publisher, reproduce (including photocopying) partially or totally the present work, store it in a database or in a retrival system, communicate or transmit to the public in any form and by any means whatsoever.

For Luxembourg, reproductions may be authorized by Luxorr (Luxembourg Organization for Reproduction Rights) - www.luxorr.lu

ISBN 978-2-87998-432-2

ISSN 2227-9660

Foreword

The Grand Duchy of Luxembourg is at the vanguard of the protection and the development of intellectual property and seeks to foster a business environment that enhances innovation and creativity.

The protection of artists’ and inventors’ rights has a long history in Luxembourg. Successive governments have been proactive in putting in place a safe IP environment by implementing EU directives and all relevant international treaties and conventions. Furthermore, the new tax regime stipulated in Article 50 bis of the income tax code and adopted by the law of December 21st, 2007 aims more specifically at stimulating R&D activities and the creation of IP which are essential assets in the 21st century economy.

Fostering economic growth through innovation is an integral part of Europe 2020, the European Commission’s economic growth strategy. Luxembourg is committed to increasing investment in research and development within the private sector. Important public means will be put at the disposal of R&D projects. Our goal is to raise public spending in R&D from 1,6% of GDP today to 2,6% of GDP in 2020.

Besides, in order to strengthen the innovation chain, Luxembourg has implemented the law of June 5th, 2009 concerning the promotion of research, development and innovation which offers a package of government incentives.

Building a modern knowledge-based economy founded on research, development and innovation that guarantees the effective protection for all creative brilliance is what we are committed to. I would like to thank the authors of this practical guide on intellectual property in Luxembourg for their valuable and comprehensive contribution to this endeavour. This book is a very useful tool for understanding the issues and the opportunities in respect to intellectual property.

Etienne Schneider

Minister of Economics and Foreign Trade

Throughout history, humans have endeavoured to improve the environment in which they live. A striving for technological progress or simply artistic or commercial creativity have always been an intrinsic part of human nature. However, a freemarket economy does mean that any activity is viewed from a perspective of profit and loss. This has led to the introduction of mechanisms to enable innovators or entrepreneurs to benefit from the fruits of their intellectual labours while ensuring a certain level of return on their investment.

However, investments in intangible assets have only really taken off since this economic model came into being following the third industrial revolution. In this new global economy, falling production costs combined with improved communications have led to a redeployment of human and financial resources towards creating added value.

Intangible assets, which generate considerable wealth, now make up a substantial proportion of the market value of most multinational companies and are a major factor on the path to success which all small and medium enterprises are now following. Aware of the challenges held by the future, Europe’s leaders decided at the European Council in Lisbon that the European Union would in future become the byword for a competitive and dynamic knowledge-based economy by primarily focusing on innovation as the driving force behind global change and development. This orientation has been maintained for the new framework HORIZON 2020.

Over recent years, and specifically in response to this initiative, the Grand Duchy of Luxembourg has focused considerable attention on creating a fertile environment for development and managing intellectual property rights on its territory.

This publication will provide readers with business activities in Luxembourg or wishing to set up in business there with a better grasp of intellectual property rights in the Grand Duchy of Luxembourg and an understanding of the benefits of being located there.

Identifying, valuing and protecting these rights is something which must be done before making any decision investment. Protecting these rights nationally and internationally is vital to ensuring that the efforts made by entrepreneurs actually bear fruit, enabling them to move into new markets.

Since these assets naturally have a true value which is much greater than the research costs involved in their creation, a proper valuation of revenues and expenses should enable businesses to improve their capacity to borrow money and attract new investors while maximising their return on investment by licensing or assigning the rights generated thereby.

The knowledge set out in this publication will finally be of interest to anyone wanting to find out about the tax landscape for intellectual property rights in the Grand Duchy and discover just how attractive this country is in this respect.

The authors

Chapter 1

Quick audit of existing intellectual property

1. Checklist

2. Checklistanalysis

We thought it would be useful to start this publication by underlining the influence and existence of intellectual property in various organisations, be they public or private. All organisations own intellectual property, but only a fraction of them protect it, and still fewer make active use of it.

The aim of the checklist provided here is to raise awareness of the impact of intellectual capital within organisations, so that it can be not only used and mobilised for developing projects but also protected.

1. Checklist

The aim here is to draw up a preliminary inventory of all an organisation’s intellectual assets. For each category we have listed not only the main intangible assets, but also the various factors relevant to managing them.

This table is designed to establish whether the organisation in question has any rights and/or is at risk with regard to intellectual property, and may be used as a basis for monitoring the actions undertaken by the organisation.

a. Which belong to the organisation itself or which it has granted to third parties

b. Developed for the organisation

c. Developed for the organisation

The second part of the checklist relates to raising awareness about the possible risks which the organisation is or could be exposed to and/or be faced with.

2. Checklistanalysis

Intellectual property rights can be used to protect some of the assets mentioned in the table. The purpose of these rights is to confer a legal existence on elements which are not visible, but which have economic value, a means of attracting and retaining clients but also of distinguishing an organisation and its products or services from its competitors.

This table is just an initial attempt to summarise an organisation’s entire creative output. It is not essential for every organisation to protect all/each of their intellectual property rights, but every organisation owns at least one protectable right, in that every organisation has a name, and therefore a brand.

The first part of the checklist serves as a basis for identifying existing rights.

It needs to be combined with the second part to establish the existence (or otherwise) of risks.

We have repeated the questions below, outlining the various possible analyses.

Chapter 2

Tools for protection – The practical benefits of Luxembourg

1. Industrial Property

2. Other intellectual property rights

3. Other tools

Luxembourg’s legislation provides a full range of tools for protecting intellectual property, covering not only copyright protection and other associated rights but also protection of intellectual property, from technical innovations to the appearance of products and distinctive signs.

This wide range of protection provides entrepreneurs and companies with the necessary tools for their protection and for developing their market(s), both in Luxembourg and in other countries. It also allows quick and effective protection.

1. Industrial Property

1.1 Patents

The gold standard for protecting technological innovations, the patent protects many of the products we use and consume every day. A patent not only ensures a strategic competitive edge but is also part of a company’s intangible assets, which can be enhanced in value and transferred.

Innovation is crucial to the viability and success of modern economies.

Globalisation has expanded the economic space within which businesses operate. Hand in hand with the opening up of new markets comes an intensification of competition, with companies finding themselves operating in a complex, difficult, constantly changing environment. The risks of imitation and counterfeiting are on the increase.

The patent is a very useful legal tool, which allows businesses to consolidate and generate value from their innovative efforts.

At an economic level, companies possessing know-how and marketing branded products and patented products or processes are in a more competitive position when it comes to gaining or maintaining market share.

1.1.1 Definition of the right

Patents and their effects

A patent is an intellectual property right which confers on its holder the exclusive right to exploit the protected invention for a maximum period of 20 years over a specified territory. The invention then comes into the public domain and may be used freely.

The holder of the patent thus has an exclusive right, enforceable against all parties, which allows him to benefit from his invention in various ways (direct exploitation, assignment of the patent, awarding of licensing agreements).

This exclusive right also allows the holder to prevent third parties (competitors) from manufacturing, selling, using or importing a patented product or system, or alternatively from using a patented process. The holder of the patent can pursue infringers before the courts. A patent is thus an effective deterrent, its very existence often being sufficient to prevent legal proceedings.

To benefit from the protection conferred by the patent, the patent proprietor has to describe his invention in detail. This description is published so that everyone can learn from it. The invention is disclosed to the public in exchange for patent protection.

A patent is simply a contract between the applicant filing the patent application and the government. This contract, the patent, requires the applicant to provide the government with a detailed description of the invention and to authorise the government to publish it (after 18 months). In return, the government confers on the applicant an exploitation monopoly, this monopoly being limited in time (maximum of 20 years) and space (the territory of the country granting the patent), provided that the invention is susceptible of industrial application, is novel and not obvious to a person skilled in the art.

What can be protected?

A patent allows protection of technological inventions relating to products and processes. Inventions may originate in any technological field.

To be patentable, an invention must, at least in Europe, belong to a specific technological field and satisfy three criteria stipulated by law. The invention must be:

◾ novel;

◾ involve an inventive step; and

◾ be susceptible of industrial application.

The invention must also not relate to a field excluded from patentability.

In Europe, a certain number of products or processes are not considered to be inventions and are consequently excluded from patentability as such. In Europe it is consequently impossible to patent in particular:

a) discoveries, scientific theories and mathematical methods;

b) aesthetic creations;

c) schemes, rules and methods for performing mental acts, playing games or doing business, as well as computer programs;

d) presentations of information.

It should be noted that these elements are not patentable only insofar as the European Patent Application or the European Patent relates to one of these elements, considered as such.

Inventions originating from one of the following categories are also excluded from patentability in Europe:

◾ inventions which, if commercially exploited, would be contrary to public order or morality;

◾ plant varieties or animal breeds as well as essentially biological processes for the production of plants or animals (it should be noted that microbiological processes and the products obtained by these processes are not excluded);

◾ surgical or therapeutic methods for the treatment of humans or animals and diagnostic methods applied to humans or animals.

Microbiological processes and the products obtained by these processes as well as products, substances and compositions for carrying out one of the surgical or therapeutic methods for the treatment of humans or animals or the diagnostic methods applied to humans or animals, for example medicinal products or surgical instruments, are nonetheless in principle patentable in Europe provided that the other conditions of patentability are met.

It should, however, be noted that other countries, in particular the United States of America, apply fewer restrictions with regard to what can be patented.

What needs to be done to file a patent application?

To file a patent application, a specification needs to be drawn up which comprises a description setting out the prior art, the technical problem solved by the invention, and the invention itself, one or more claims, an abstract and if applicable one or more figures.

Drafting patents is a special skill and requires real expertise. It is consequently essential to use the services of a patent attorney.

Who does the patent belong to?¹

A patent application can be filed by any natural person or legal entity. The applicant is deemed to be authorised to exercise the patent rights and will, after grant, be the holder of the patent. If the applicant is not the inventor, then the applicant must be able to prove how the rights to the invention were acquired from the inventor.

The inventor is the natural person, i.e. the man or woman, who developed the invention. The successor in title, namely the patent applicant, is the natural person or legal entity (a company, for example) who has acquired the rights to the invention from the inventor.

In Luxembourg the owner of the patent is the person who first filed the patent application. This is not necessarily the inventor.

An employer is deemed in law to be the proprietor of any inventions made by his employees when carrying out their appointed tasks. The same is true when the invention is made by an employee whether during the performance of his duties, or in the field of the company’s operations, or through the knowledge or use of techniques or resources specific to the company or data provided by the company. If the employer makes an exceptional profit based on the patent, the inventor does however have a right to additional remuneration.

It should however be noted that this system only applies to employees in the strictest sense: trainees, for example, retain ownership of their inventions unless contractually specified otherwise.