.. Loading ..

Moldovan Government cancels the minimum 15 % royalties to employees creating intellectual property in the course of employment

August 5, 2019

The Government passed amendments to its Decision no. 1609 of 31 Dec. 2003 which cancelled the minimum 15 % royalties due to employees for the intellectual property objects that they created in the course of employment. The royalties were to be calculated from the gross revenues obtained from the use of the respective intellectual property (be it copyrighted works, inventions, etc.), even if it was the client and not the employer who used it and for whom the product was created from the beginning. The amount of the obligatory royalties were not dependant on the provisions of the employment contract.

Those provisions raised significant concerns for many IT companies working in Moldova and their clients. Many companies work as contractors for foreign customers. The previous version of the Decision no 1609 created risks on the part of the clients for whom Moldovan companies created various intellectual products.

The employees who participated in the creation of copyrighted works as part of their employment are considered authors of such works. Under the previous version of the Decision they could potentially claim up to 15 % of gross revenues obtained from the use of those works even in cases when they were created while executing client’s assignments. The right to claim roaylties remained valid even in the case when the respective intellectual property rights were assigned to third parties. The risks were too high for many clients wishing to work with Moldovan companies.

The amendments passed by the Government eliminated these risks. According to the newly approved amendments (which became effective on 02 August) any royalty/remuneration for the use of intellectual property will now be negotiated directly between the employer and the employee. They also allow to include such royalties into the salary set forth in employment contracts.