IP in business transactions: Austria overview

A guide to intellectual property law in Austria. The IP in business transactions Q&A gives an overview of maintaining an IP portfolio, exploiting an IP portfolio through assignment and licensing, taking security over IPRs, IP and M&A transactions, and the impact of IP on key areas such as competition law, employees and tax.

To compare answers across multiple jurisdictions, visit the IP in business transactions Country Q&A tool.

This Q&A is part of the PLC multi-jurisdictional guide to IP law. For a full list of jurisdictional Q&As visit www.practicallaw.com/ip-mjg.

Constantin Kletzer and Kristina Hesse, Fiebinger Polak Leon Rechtsanwälte
Contents

Overview of main IPRs

1. What are the main IPRs in your jurisdiction? How are they protected?

Patents

Protection. The applicable law is the Austrian Patent Act (Patent Act). Under section 1 of the Patent Act, patents are granted for inventions in all fields of technology, if they are:

  • New.

  • Not obvious to a person skilled in the art.

  • Susceptible to industrial application.

Biotechnological inventions can also be protected under certain circumstances (section 1(2), Patent Act).

Certain fields are specifically excluded from patent protection (such as discoveries or aesthetic creations, schemes, rules and methods for performing mental acts, and so on) (section 1(3), Patent Act). Further, inventions contrary to public policy, morality and methods of treatment cannot be protected (section 2, Patent Act).

Registration. To enjoy patent protection, registration with the Patent Office is required. Applications for the grant of patent protection are examined by the Patent Office for compliance with the substantive law (that is, novelty, inventive step, and so on). Within 18 months from the filing date, the application will be published. Where protection is granted by the Patent Office, it is published in the Patent Gazette. Opposition to the patent application can be filed by any third party within four months after the date of publication of the patent.

Utility models are protected under the same conditions as patents. The Patent Office examines the application form, and grants utility model protection immediately.

Trade marks

Protection. A trade mark consists of any sign capable of being represented graphically, particularly in words, including personal names, designs, letters, numbers, the shape of goods or of their packaging, provided these signs are capable of distinguishing the goods or services of one company from those of others. Registered trade marks are protected by the Trademark Protection Act.

The Trademark Protection Act excludes certain signs from trade mark protection, for example:

  • Signs consisting exclusively of national armorial bearings, national flags or other state emblems.

  • Non-distinctive, purely descriptive signs.

  • Generic signs.

Registration. Applications for the registration of national trade marks must be submitted to the Patent Office. The Patent Office examines the formality requirements, for example, whether there are any obstacles to registration or applicable grounds to refuse registration, and conducts research to ensure that other similar or identical trade marks have not already been registered. If the formalities are all complied with, the trade mark is registered and published in the Trademark Gazette. Third parties holding identical or similar trade marks that were previously registered have three months from the date of publication of the trade mark to oppose its registration.

Copyright

Protection. Works are protected by the Copyright Act if they meet the applicable originality criteria. Protected works are intellectual creations in literature, musical art, visual art and cinema. Copyright arises with the act of creation of a work by its author.

Mere ideas, facts, styles, techniques or methods of creation cannot be monopolised and are therefore not protected under the Copyright Act.

Registration. Neither registration nor notification are required.

Design rights

Protection. Under the Design Protection Act, a design is the specific appearance of a product or a part of it, which results particularly from the characteristics of lines, outlines, colours, appearance and the structure, surface or the material of the product as well as its decoration. To enjoy protection by design rights, the design must be new and have an individual character.

Registration of designs that are contrary to public policy or morality are refused. No ex officio examination on whether the design is new, has individual character, conflicts with existing design rights or whether the applicant is creator or heir of the design is conducted in course of the application proceedings (section 16, Design Protection Act).

Registration. Registration in respective design right databases is necessary. Applications for national designs must be submitted to the Patent Office. There is also the option to apply for a Registered Community Design (RCD) or a design to be protected as an Unregistered Community Design (UCD).

Confidential information

Various regulations protect confidential information (including sections 122 et seq of the Criminal Code which covers the disclosure of business and trade secrets, spying for those secrets, or spying for those secrets in favour of foreign countries). The Unfair Competition Law protects confidential information (sections 11 to 13, Unfair Competition Law). The business concerned can claim for a preliminary or ordinary injunction and damages within civil proceedings.

Other

Under certain conditions, the following IPRs enjoy protection:

  • Unregistered signs, layout, corporate design, company signs and slogans (in particular if they have acquired distinctiveness through secondary meaning within the relevant public).

  • Names, trade names and commercial names (section 9, Unfair Competition Law).

  • Titles (section 80a, Copyright Act, and section 9, Unfair Competition Law).

  • Utility models (Utility Model Law).

  • Semi-conductors (Semi-Conductor Law).

  • Geographical indications (sections 68 et seq, Trademark Protection Act).

  • Plant varieties (Plant Varieties Protection Law).

  • Supplementary protection certificates (available in the field of medicine and plant protection).

  • Foreign IPRs (see Question 27).

For further information about the Main IPRs, see Main IPRs: Austria.

 

Maintaining IPRs

2. What facilities are available to conduct IP searches and obtain IP information on registered IP rights?

Patents

Prior to application. Patent searches can be conducted on the Patent Office register (www.patentamt.at) which offers the relevant national patent documents, or via the European Patent Office's search facilities. The Patent Office also provides professional searches for patent documents where worldwide databases can be searched. An express search concerning novelty and inventive step can be requested. In addition, the European Patent Office offer free access to more than 70 million patent documents worldwide, containing information about inventions and technical developments from 1836 up to the present day (www.epo.org/espacenet).

After registration. The Patent Office provides periodic patent monitoring services concerning the activities of competitors. In addition to this, private search providers are available to conduct IP monitoring.

Trade marks

Prior to application.Searches for trade marks or trade mark applications can be conducted with the Austrian Patent Office (www.patentamt.at), the registers of the Office for Harmonisation in the Internal Market (OHIM), the World Intellectual Property Organisation (WIPO) and other private resources. The Patent Office also allows trade mark availability searches, which means that identical and/or similar trade marks (whether in application status or already registered for protection in Austria) can be searched, and if necessary, evaluated by an official expert.

After registration. The Austrian Patent Office provides monitoring services with monthly searches for new identical or similar trade marks, or trade mark applications (which have protection in Austria) with the Austrian, European or international trade mark registers.

Copyright

In relation to other IPRs, such as copyright or rights in a name, which are not registered, investigation should be conducted on the relevant market as far as possible (including searching internet databases and searching for trade names in the Commercial Register).

Design rights

The Austrian Patent Office provides register status information for design rights and utility models. European and international searches can be conducted with the Office for Harmonisation in the Internal Market (OHIM) and the World Intellectual Property Organisation (WIPO).

Confidential information

Naturally, neither searches not registration of confidential information are available.

Other

Searches for company names can be conducted in the companies' register.

 
3. What steps must a business take to maintain the registration and status of its main IPRs?

Patents

To maintain the validity of a patent, payment of annual renewal fees is necessary. A patent is protected for up to 20 years from its application date (section 28, Patent Act). Extension of the protection period is generally not possible, though in the field of medicine and plant protection supplementary protection certificates are available, which extend the patent protection period by up to five years. There is no obligation to use a patent. It is not obligatory for a patent owner to initiate legal proceedings against any patent infringement.

Trade marks

After registration of a trade mark, its protection remains valid for ten years (section 19, Trademark Protection Act). After that, payment of renewal fees is necessary to extend the trade mark protection for another ten years. It is possible to renew the protection an indefinite number of times. Therefore, there is no maximum protection term for trade mark rights. Within a term of five years following registration there is no requirement to use the trade mark. After this five-year period, non-use of the trade mark does not automatically nullify the trade mark, but it's non-use during a five-year period following registration does leave the trade mark vulnerable to cancellation on a third party's request (where there are no good grounds for the non-use of the trade mark).

In addition to this, where the sign becomes a generic term in consequence of the acts or inactivity of the trade mark holder, a third party can file a motion to have the trade mark cancelled on the basis that it is a generic term.

A trade mark owner loses his right to contest a registered trade mark if he has acquiesced, for five successive years, the use of a later trade mark in Austria while being aware of the use, unless the use of the later sign was begun, or was made as an application in bad faith.

In relation to the use of trade marks which are low in distinctiveness, it is recommended that these signs are used in conjunction with a ® symbol so that the public knows that the sign is protected as a trade mark. Further, the indication may reduce the risk of the sign becoming a generic term.

Copyright

Copyright arises automatically with creation of the work. No registration is necessary and no fees apply. The maximum duration of a copyright is 70 years, beginning with the end of the year the author died (section 60, Copyright Act). Where the author has used an alias name, the copyright ends 70 years after the copyright has been created.

Design rights

Once registered, a design right stays in force for five years (section 6, Design Protection Act). After expiry of this term, renewal fees must be paid to extend protection for another five-year term. Design rights enjoy protection for up to 25 years.

Confidential information

Not applicable.

Other

Utility models are valid for ten years form the filing date (section 6, Utility Model Act). Extension of the term of protection is not possible.

Names, trade names and commercial names are protected from the beginning of their use until they are abandoned (section 9, Unfair Competition Law).

Unregistered signs, layout, corporate designs, company signs and slogans are protected from the time of having acquired secondary meaning in the relevant public until it is lost or finally ceases to be used (section 4(2), Trademark Protection Act).

Titles of works are protected if they are distinctive.

 
4. What steps can a business take to avoid committing an infringement of another party's IPR and to monitor whether a competitor is infringing its IPRs?

Patents

The infringement of IPRs cannot be absolutely prevented, as not all IPRs are necessarily registered. However, risk can be reduced by monitoring the relevant online registers and the relevant market (see Question 2).

Rights holders of IPRs for certain products are entitled to apply to the Customs Authorities to seize or withhold suspected counterfeit products. Finally, employees can be trained in IPR issues to help identify and combat infringements.

Trade marks

See above, Patents.

Copyright

See above, Patents.

Design rights

See above, Patents.

Confidential information

See above, Patents.

Other

See above, Patents.

 

Exploiting IPRs

5. What are the main steps in an IP audit in your jurisdiction to determine the content of an IP portfolio?

Patents

To verify the existence and the scope of registered IPRs, searches can be conducted in the respective registers as a first step of evaluation (see Question 2). The actual existence (registration) of an IPR and their owner, as well as the basic scope and term of protection, can be verified.

However, these registers do not necessarily show the real scope of IPRs as contractual limitations may be given. The actual scope of trade mark protection may be reduced (for example, due to lack of genuine use within the last five years or due to co-existence agreements). In the course of a transaction the due diligence request list should include matters concerning IPRs.

In relation to unregistered IPRs, the focus should be on any (written) contractual agreements provided by the owner or licensee. Representations and warranties should ensure a certain level of content of IPRs, although disputes may still occur with real IPR owners through the lack of entitlement of the contracting party.

Trade marks

See above, Patents.

Copyright

See above, Patents.

Design rights

See above, Patents.

Confidential information

See above, Patents.

Other

See above, Patents.

 

Assignment

6. How can main IPRs be assigned?

Patents

The right to file for a patent and the patent itself can be transferred to legal successors. These rights can be transferred completely or partially through a:

  • Contractual agreement.

  • Court decision.

  • Final will.

In a patent transfer, respective transfer fees must be paid. The transfer must be registered in the Patent Register (sections 43(5) to 43(7), Patent Act). This registration has constitutive effect. The right to nominate the inventorship of a patent cannot be assigned.

Trade marks

Trade marks can be freely transferred in whole or in part. When selling a company, its trade mark rights are automatically transferred to the new owner unless the parties explicitly agree otherwise (section 11, Trademark Protection Act).

The change in ownership can be requested to the Patent Office's trade mark register by either party, whereas the deed of assignment (which is produced to the Patent Office) must contain the notarised signature of the party transferring ownership of the trade mark.

An update of the trade mark register has only declaratory character. The new trade mark owner may already initiate legal proceedings for trade mark infringements prior to registration. The Patent Office can reject the application for registration of a new owner if this causes a likelihood of deception (section 4(1) (No 8), Trademark Protection Act).

Copyright

Copyright may only pass to legal (universal) successors of the author. Otherwise, assignment is not possible. The author (or his heirs) can transfer exclusive exploitation rights (Werknutzungsbewilligung) and non-exclusive exploitation rights (Werknutzungsrecht) to third parties.

Design rights

The right to file for a design right and the design itself can be transferred. These rights can be transferred in whole or in part. Design rights can also be inherited. A registration of transfer is constitutive. The right of nomination as creator of the design cannot be assigned.

Confidential information

Not applicable.

Other

The acquisition of a company entitles the new owner to continue the business under the previous company name without any additional registration of the successor. However, a consent is required where the company name includes the given name of the previous owner.

 
7. What formalities are required to assign each of the main IPRs?

Patents

The Patent Office requires a written application including a deed of assignment, signed by both parties. The signature of the assignor must be notarised, including certification that the person signing is that person, and that the person is authorised to act on behalf of the assignor. In relation to certification by notary publics outside Austria, international legalisation rules must be respected. Payment of a transfer fee is required.

The new patent owner takes over all limitations that are registered and all limitations that have been applied for at the Patent Office at the time of the application for actualisation of the patent register (section 44, Patent Act).

Trade marks

The Patent Office requires a written application including a deed of assignment, signed by both parties. Notarisation is required, see above, Patents. Payment of a transfer fee is required.

Copyright

Copyrights are not assignable. An author can authorise third parties to either exclusively or non-exclusively use its work by written, oral or implied agreement. These agreements are not bound to any formalities. However, it is recommended to set up these agreements in written form to avoid problems of evidence (see Question 11).

Design rights

For requirements, see above, Patents. Payment of a transfer fee is required.

Confidential information

Not applicable.

Other

For company names, see Question 6, Other.

 
8. What main terms should be included in an assignment of IPRs?

An assignment of IPRs includes the following main terms:

  • Assignor and assignee.

  • Description of the IPR to be transferred.

  • Clause of assignment.

  • Acceptance of assignment by the assignee.

  • Representations and warranties.

  • Consideration.

  • Choice of law in the case of international assignments.

 

Licensing

9. How can each of the main IPRs be licensed?

Patents

A patent owner can authorise third parties to use the patented invention, or parts of it, either:

  • Exclusively or non-exclusively.

  • Within the whole of the relevant territory, or within parts of it.

Licences can be registered on the patent register, which makes the licence effective against third parties. However, even if the licence has not been registered in the register, the exclusive licensee may initiate legal proceedings for patent infringements in its own name against infringers.

Trade marks

Trade mark owners can grant a licence:

  • Either exclusively or non-exclusively to third parties.

  • For all or only some of the goods or services.

  • For the whole of the relevant territory, or parts of it.

The licence right can be registered, though the registration is only of a declaratory character.

Copyright

The right to exclusively use an author's work is called an exclusive licence. The right to use an author's work non-exclusively is called a simple licence. They can cover all or only some of the exploitation rights (for example, the right to distribute, copy, send, broadcast, perform or make available to the public). There is no copyright register, therefore registration is not possible.

Design rights

The licence of a design right may be exclusive or non-exclusive. The scope of a licence can be limited to a certain period, territory or certain goods. Licence rights are acquired with conclusion of the respective contract, but to enforce licence rights against third parties, the licensee must be registered within the appropriate registry.

Confidential information

Not applicable.

Other

Not applicable.

 
10. What are the formalities to license each of the main IPRs?

Patents

No formalities and no registration is required. Licence agreements are not bound to formalities and can be concluded in oral, written or implied form. Licences are acquired with the conclusion of a respective agreement (see also Questions 7 to 10).

Trade marks

See above, Patents.

Copyright

See above, Patents.

Design rights

See above, Patents.

Confidential information

See above, Patents.

Other

See above, Patents.

 
11. What main terms should be included in an IP licence?

IP licences should contain the following terms:

  • Contracting parties (if necessary, including a prohibition of assignment).

  • Licensed IPRs (and variations of this).

  • Exclusivity or non-exclusivity of the licence.

  • Territory of licence.

  • Actual type of use.

  • Clarification of right to grant sub-licences.

  • Registration of licence in respective registers.

  • Entitlement to initiate infringement proceedings.

  • Duration or termination.

  • Obligations after termination of the licence agreement.

  • Licence fees and payment.

  • Formal requirements concerning changes of the licence (written form only).

  • Severability clause.

  • Applicable law or place of jurisdiction.

 

Taking security

12. Is security commonly taken over IPRs?

Compared to security over real estate it is rather uncommon, but possible, to take security over patents, trade marks and design rights. If at all, liens are taken over trade marks or patents. Even if a lien is taken over a patent, the patent owner can sell this patent to third parties. Therefore, it is recommended to contractually agree on respective prohibitions of sale.

 
13. What are the main security interests taken over IPRs?

Patents

Liens are the main security taken over IPRs, arising by registration in the respective register for patents, trade marks or design rights, which renders them effective against third parties. There are no copyright registers, therefore the publication of liens and their valid creation is not possible.

Trade marks

See above, Patents.

Copyright

See above, Patents.

Design rights

See above, Patents.

 

M&A

14. What IP-related due diligence is commonly carried out in both a share sale and an asset sale?

Share sale

In both cases an evaluation of the following issues should be made:

  • Existence and actual scope of respective IPRs (such as registration and observance of timely payment of renewal fees).

  • Limitations of IPRs (for example, due to contractual agreements, conflicts with non-registered rights and lack of genuine use).

  • Actual entitlement of the seller to dispose of respective IPRs.

  • Existing or future (risks of) proceedings with other IPR owners.

  • Availability of domains.

In a share sale, change of control clauses may authorise contracting parties to terminate an agreement which may cause IP-related problems for the buyer.

Asset sale

In an asset deal rules on transfer rights must be obeyed (see also above, Share sale).

 
15. What IP-related warranties and/or indemnities are commonly given by the seller to the buyer in both a share sale and an asset sale?

Share sale

Provisions regarding representations and warranties can vary widely, depending on the IPR concerned. In acquisitions relating to patents, the seller will regularly include provisions that they are not liable for defects of quality (that is, if a patented invention is technically not usable or not applicable in trade). In addition, liability for the validity or dependency of the patent is regularly excluded. This same provision is also often used in trade mark agreements.

Conversely, the seller is usually liable for any defects in title (that is, title to the IP right, any granted licences, pledges or employees' invention rights). The parties will usually agree that a seller is liable for the status of the IP right (patent or trade mark) on the register, that the registration is correct, and that, to his knowledge, no oppositions or nullity actions have been brought against the IP rights. These provisions are normally limited subjectively (that is, they are given to the best of the party's knowledge at the time). Any representation or warranty can also be combined with indemnification clauses.

Asset sale

See above, Share sale.

 
16. How are the main IPRs transferred in both a share sale and an asset sale?

Share sale

In the course of a share deal, no transfer as such is taking place with the target. In a share deal, the entitled entity remains the same, IPRs do not need to be transferred.

Asset sale

In an asset sale, the transfer requirements (see Questions 6 and 7) must be respected.

 

Joint ventures

17. Is it common for companies to set up joint ventures in your jurisdiction to develop projects that heavily involve IPRs?

Joint ventures are occasionally used for IPR development. Where any such joint venture is established the following terms should be included:

  • Subject of the joint venture agreement.

  • Specifications of the joint venture company.

  • Financing of the joint venture.

  • Management of the company.

  • General assembly and decisions.

  • Rapport between the parties and the joint venture company.

  • Accounting.

  • Reporting.

  • Confidentiality.

  • Non-competition.

  • Assignment of shares (assignment to affiliated companies).

  • Change of control.

  • Deadlock.

  • Duration or termination.

 

Competition law

18. What are the main provisions of your national competition law that can affect the exploitation of the main IPRs?

Cartels

Under the provisions of the Cartel Act, agreements, decisions and concerted practices which lead to, or intend to lead to, the prevention, restriction or distortion of competition are prohibited (section 1, Cartel Act). There are certain exemptions from this prohibition (section 2, Cartel Act). In the case of intentional or negligent infringement, maximum fines of up to 10% of the total turnover in the preceding business year can be imposed on the respective companies. In deciding the level of the fine, consideration is given to the infringement's gravity and duration. Respective block exemptions are also taken into account.

Abuse of a dominant position on the market

A company is market dominating, when as the supplier or the supplied, it:

  • Is exposed to no or only insignificant competition.

  • Has, in relation to the other competitors:

    • a very superior market position;

    • financial strength;

    • relations to other companies;

    • access possibilities to supply and sales markets;

    • circumstances limiting market access for other companies.

Section 4(2) of the Cartel Act provides disprovable presumptions for a dominant position. A company is also considered as market dominating when in relation to its customers or suppliers, it holds a superior market position. This is particularly relevant if customers and suppliers are dependent on the maintenance of the business relationship to avoid severe business disadvantages. Abuse of the dominant market position is prohibited.

Merger control

Mergers within the meaning of the Cartel Act require an application for registration with the Federal Competition Authority (Bundeswettbewerbsbehörde), if the companies involved achieved in the last fiscal year before the concentration the following turnover proceeds:

  • More than EUR300 million worldwide.

  • More than EUR30 million within Austria.

  • At least two of the businesses involved achieved EUR5 million each worldwide.

(As at 1 March 2012, US$1 was about EUR0.7.)

Section 9(2) and section 19 of the Cartel Act provide certain exemptions from the application requirement. There are special regulations for mergers of media. Concentrations that require an application are only executed after either:

  • A refusal of to initiate an examination proceeding.

  • A delay in requiring that such an examination be conducted.

  • The termination of examination proceedings or an affirmation within the meaning of section 17 of the Cartel Act.

 
19. What are the most common national competition law issues that arise in the exploitation of the main IPRs?

As case law is strongly aligned with European competition laws, compliance with the rules provided by the European Commission and the case law of the European Court of Justice (ECJ) is recommended.

Below are some examples of case law and literature which demonstrate national competition law issues in conjunction with the exploitation of IPRs.

Monopoly to one movie

It was held that a monopoly to one movie is only qualified as a dominant position in the market if the movie is not substitutable from an objective point of view. This may be due to the expectation of high sales volumes, the importance for a business's marketing strategy or an unique image of this movie (Supreme Court 1 July 2002, 16 Ok 5/02 - Chocolat).

Category management and private labels

Category management agreements between industry and commerce which intend to create trade marks as private labels can be qualified as contrary to the Cartel Act. In particular, cases where businesses of commerce include private labels within their range of goods, and where these businesses collaborate with trading companies, an exchange of information or pricing guidelines can have unfair influence on the competitive market (Wollmann in ecolex 2011, 51).

Non-competition clauses

In the assignment of IPRs, it is advisable to include a clause in the contract that the seller will not compete with the buyer for a certain period of time and in a specific market. Non-compete periods are generally between one and five years. Periods longer than five years can be deemed as anti-competitive in both Europe and Austria and are not subject to clearance under merger control provisions. These clauses are not generally deemed as anti-competitive if they are necessary to secure a smooth transaction (ancillary restraints). However, non-compete periods longer than five years are not usually deemed as ancillary restraints.

 
20. What exclusions or exemptions are available for national competition law issues involving the exploitation of the main IPRs?

In general, the subject matter of an IPR is not a competition issue (there are leading authorities from the ECJ on this point). Unless the exclusions contained in Question 18 apply, no exemptions are available.

 

Advertising

21. To what extent do advertising laws impact on the use of third party trade marks?

Under section 2a of the Unfair Competition Law (based on EU Directive 2006/114/EC concerning misleading and comparative advertising (Misleading and Comparative Advertising Directive), comparative advertising is generally permitted unless it:

  • Is misleading (for example, by comparing goods or services not meeting the same needs).

  • Discredits, denigrates or takes unfair advantage of trade marks, trade names or other distinguishing signs of a competitor.

 

Employees and consultants

22. Who owns each of the main IPRs created by an employee in the course of his employment? Is compensation payable in relation to employee IPRs? What main steps can an employer take to ensure it owns each of the main IPRs?

An actual evaluation of IPR ownership in the course of employment depends on the facts of the case, as employment can be subject to particular regulations, such as individual employment contracts, collective agreements or individual service contracts with freelancers.

Patents

Employees generally have the right to apply for patent protection of inventions that were made in the course of their employment unless contrary contractual regulations or an employment subject to public law are given (section 6 et seq, Patent Act). Therefore individual contracts or respective agreements must provide provisions ensuring that the employer has rights to the patent.

If the employer acquires an employee's invention, the employee is entitled to adequate consideration. Very detailed statutory provisions and practice apply.

Design

Employers or contracting parties and their legal successors have the right to apply for design protection of a design which has been created by an employee within the course of his employment or which has been invented due to an individual contractual basis, unless contrary agreements exist (section 7(2), Design Protection Act). Monetary compensation is not prescribed by the law.

Trade marks

The Trademarks Protection Act does not contain the concept of a right/entitlement to a trade mark. Quite simply, whoever registers the trade mark is the trade mark holder. If this registration is in breach of a contract, the entitled party must file a civil action with the court.

Copyright

The Copyright Act does not provide regulations concerning works which are created in the course of employment. Usually, provisions are contained in the employment contract. If this is not the case, it is for the court to interpret the legal situation, though current court practice tends to presume that the employer has adequately compensated the employee for that IPR, unless there is contrary evidence.

Special provisions exist for software and databases. If an employee created the software within the course of his employment, the employer has an unlimited right to use this software, unless contrary agreements exist. The same applies to databases that were created by an employee within the course of his employment.

 
23. Who owns each of the main IPRs created by an external consultant? What main steps can a business take to ensure it owns each of the main IPRs?

To ensure IPRs created by an external consultant are owned by the business, an agreement should be drawn up which clarifies that the IPRs are assigned, together with the financial arrangements that are agreed.

Where there is no such agreement, the IPRs are held by the external consultant.

 

Tax

24. What are the main taxes payable by a licensor on the licensing of the main IPRs?

Individual income tax

This tax only applies to individuals. The rate is graded from 36.5% to 50% depending on the annual taxable income of the individual. Taxable income is the total of income from the income sources as set out in section 2 of the Individual Income Tax Act. It is infinitely applicable for individuals who have their residence or their habitual place of abode within Austria. Income tax is based on the taxable income derived by a taxpayer within one calendar year.

The following constitutes income from rental which is subject to income tax (section 28, Income Tax Act):

  • Licences of an exclusive or non-exclusive right to use a work of authorship.

  • The assignment of IPRs, industrial know-how and licences.

The (individual) inventor of a patent is entitled to a 50% reduction in the income tax rate if the requirements under section 38 of the Income Tax Act are met.

The conditions for income tax relief include:

  • Only the inventor is entitled to such reduction (even if he may not be the patent owner).

  • Only incomes resulting from the exploitation of a patent enjoying patent protection are covered.

  • Patent protection must be valid and upheld within the time of either the:

    • payment of licence fees;

    • sale of the invention.

  • Patent protection must be valid within the territory in which either:

    • the invention is exploited;

    • in the case there is only exploitation within foreign countries, it is sufficient if the patent enjoys protection in Austria.

  • Respective tax reduction is only valid for the time during which patent protection is given.

Corporate income tax

Corporate income tax is charged at 25%. It is based on the taxable income derived during a calendar year by a taxpayer who is subject to unlimited tax liability. Taxable income is the total of income from the income sources as set out in section 7 of the Corporate Income Tax Act. This tax is infinitely applicable for corporate entities with a place of management or seat within Austria.

Withholding tax

Taxes for licence fees must be paid annually in the place of residence of the licensor. Various treaties may provide contrary taxation (for example, withholding in the place of residence of the paying licensee).

In relation to the payment of licence fees between associated companies of different EU member states, Directive 2003/49/EC on interest and royalty payments (Interest and Royalty Directive) applies (see section 99a, Individual Income Tax Act).

Stamp duty

Stamp duty of 0.8% of gross consideration is due for the assignment of rights under section 33 Tariff (No 21) of the Stamp Duty Act.

 
25. What are the main taxes payable by a seller on the disposal of the main IPRs?

There is no specific tax treatment for an IP transfer. Income tax is imposed on income from trade businesses (section 23, Income Tax Act) which also covers profits. This profit is the difference between net equity at the end of the financial year and the equity at the end of the last preceding financial year. Therefore, income derived by a taxpayer due to the sale of IPRs is subject to (corporate) income taxes. A general sales tax also applies.

The inventor's revenues arising from the sale of a patent are privileged (section 38, Income Tax Act). (For further details and for stamp duty, see Question 24.)

 

Cross-border issues

26. What international IP treaties is your jurisdiction party to?

Austria is party to the following agreements:

  • Convention Establishing the World Intellectual Property Organisation 1967.

  • WIPO Berne Convention for the Protection of Literary and Artistic Works 1971 (Berne Convention).

  • WIPO Brussels Convention Relating to the Distribution of Programme-Carrying Signals transmitted by Satellite 1974 (Brussels Satellite Convention).

  • WIPO Paris Convention for the Protection of Industrial Property 1883 (Paris Convention).

  • Convention for the Protection of Producers of Phonograms Against Unauthorised Duplication of Their Phonograms 1971.

  • Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations 1961.

  • WIPO Copyright Treaty 1996.

  • WIPO Performances and Phonograms Treaty (WPPT) 1996.

  • Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure 1977.

  • WIPO Madrid Agreement Concerning the International Registration of Marks 1891.

  • WIPO Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks 1989 (Madrid Protocol).

  • Patent Cooperation Treaty 1970 (PCT).

  • European Patent Convention 1973 (EPC).

  • Locarno Agreement Establishing an International Classification for Industrial Designs 1968.

  • WIPO Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks 1957.

  • WIPO Strasbourg Agreement Concerning the International Patent Classification 1971.

  • WIPO Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks 1973.

  • WTO Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 (TRIPS).

  • UN Universal Copyright Convention 1952.

  • International Convention for the Protection of New Varieties of Plants 1961 (UPOV Convention).

 
27. Are foreign IPRs recognised in your jurisdiction?

Patents

Patents under the Patent Cooperation Treaty 1970 (PCT) with designation for Austria and European patents designating Austria have legal effect. Specific provisions apply (for example, that a translation into Austrian is provided).

Trade marks

International trade marks that have been designated for protection in Austria enjoy equivalent protection to national trade mark registrations. Community trade marks enjoy protection in Austria under Article 16 of Regulation (EC) 40/94 on the Community trade mark (old Community Trade Mark Regulation).

Copyright

Under the WIPO Berne Convention for the Protection of Literary and Artistic Works 1971 (Berne Convention), works originating in one of the contracting states must be given the same protection in each of the contracting states as the works of its own nationals. For countries which are not contracting states to the Berne Convention, the Universal Copyright Convention grants for published works of nationals in any contracting state, and works first published in that state, the same protection as that state accords to works of its nationals first published in its own territory.

Design rights

Community design rights enjoy protection in Austria according to Article 39 of Regulation (EC) 6/2002 on Community designs (Community Designs Regulation). In addition, industrial design rights may be protected by the WIPO Hague Agreement Concerning the International Deposit of Industrial Designs 1925.

 

Reform

28. Are there any proposals for reform?

There are no significant current reforms in the pipeline.

 

Contributor details

Constantin Kletzer

Fiebinger Polak Leon Rechtsanwälte

T +43 1 582 580
F +43 1 582 582
E c.kletzer@fplp.at
W www.fplp.at

Qualified. Austria (Vienna), 2003

Areas of practice. Patent law; trade mark law; copyright and design law; product piracy; unfair competition law; licensing and publishing agreements; pharmaceutical regulatory issues.

Recent transactions

  • Acting for Merck & Co Inc in patent infringement proceedings against several generics based on a patent regarding a new pharmaceutical use of a substance.
  • Acting for a world-leading provider of wireless technology and services concerning IP and IT issues with respect to projects in Austria (for example, agreements with various universities in research and development projects for augmented reality applications).

Kristina Hesse

Fiebinger Polak Leon Rechtsanwälte

T +43 1 582 580
F +43 1 582 582
E k.hesse@fplp.at
W www.fplp.at

Qualified. Not yet admitted in Austria

Areas of practice. Patent law; trade mark law; copyright and design law; product piracy; unfair competition law; licensing and publishing agreements; IP law; general business law; commercial law.

Recent transactions

An associate at Fiebinger Polak Leon Attorneys-at-Law, Kristina studied at the University of Constance and graduated from the University of Vienna School of Law in 2009.


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