By Andrés Jagemberg

Intellectual Property is constitutionally recognized in Article 98 of the Bolivarian Constitution of Venezuela, which establishes that the State will recognize and protect Intellectual Property over scientific, literary and artistic works, inventions, innovations, denominations, patents, trademarks and slogans in accordance with the conditions and exceptions established by law and international treaties signed and ratified by the Republic regarding this matter. The concept of Intellectual Property is very broad, but we can generally say that intellectual property is all creation of the human intellect which characteristics fit in the requirements set forth in the national legislation. Thus the rights of creators, inventors and other holders are protected by granting them a series of privileges. In this sense, intellectual property developed under dependency relationship is of great importance, not only at a business level but also for the country, because if the State stimulates innovation and technological development, the country can obtain income other than the oil rent, and consequently enhance the economic well-being. In the labor context, Intellectual Property was recognized in article 80 of the Organic Labor Law (LOT) of 1997 [1], currently repealed. It classified any inventions or improvements made by the worker/employee in three areas:

• Of service: Those performed by workers hired by the employer in order to research and obtain different means, systems or procedures.
• Of business: Those inventions in which the facilities, procedures or methods of the business in which they are produced are determinant.
• Free or occasional: Characterized by the predominance of the effort and talent of the inventor, not specifically hired for that purpose.

In several judgments of the Supreme Court of Justice (TSJ) in its Social Cassation Chamber [2], it is established that workers have the right to be recognized their intellectual property on their inventions, innovations or creations, also highlighting the modalities of innovations that within an employment relationship could occur pursuant to articles 81, 82 and 83 of the LOT (explained above).

In this regard, the Social Cassation Chamber noted that in the case of inventions or improvements of service or of business, Article 84 of the then current LOT provided that the ownership of such rights corresponded to the employer, but the worker inventor has the right to participate in the enjoyment of such inventions when the remuneration of the work performed by the worker is disproportionate to the magnitude of the result. The amount, in this case, should be set equally by the parties, with the approval of the Labor Inspector of the jurisdiction and, in the absence of agreement, by the judge. Regarding free or occasional inventions, the ownership of the same is attributed to the worker inventor, the employer having the preferential right to acquire it within ninety days of the notification made by the worker through the Labor Inspector or a Judge with competence in labor matters. However, upon the entry into force of the new Organic Labor Law (LOTTT) in 2012 [3], there were many and important amendments in relation to intellectual property rights for workers under the employment relationship.

For example, the classification of inventions, innovations or improvements made by workers was reduced, excluding the so called inventions “of business.”

Despite this, the new LOTTT also recognizes how important it is for the development of all inventions, whether of service or free or occasional, the facilities, procedures, or methods of the employer, but omitting the word “determinant”, thus we can say that, according to the current provision, the facilities, procedures, or methods of the employer are important but not determinant in the development of the inventions made under the employment relationship.

The concept of inventions, whether of service or free or occasional, is maintained in the new Law in Articles 323 and 324.

Also, differences were established on “intellectual production” depending on the productive sector, whether public, financed through public funds, or private. The new LOTTT establishes in Article 326 that all “intellectual production”, generated under an employment relationship in the public sector or financed through public funds, that originates Intellectual Property rights, will be considered of public domain. While in the private sector workers can keep their rights unlimitedly and for the entire duration of each invention, innovation or improvement, the employer can exploit the work for the duration of the employment relationship only, or under a license agreement [4] granted by the worker to the employer.

Furthermore, the new LOTTT states that the inventor will be entitled to participate in economic enjoyment when the remuneration of the inventor for his/her work is disproportionate to the magnitude of the profits resulting from the invention, innovation or improvement. In this sense, neither the repealed LOT nor the new LOTTT express a form of calculation for such participation, although the bulletins (BA-VEN-NIF) [5] issued by the Federation of Public Accountants’ Associations of Venezuela (FCCPV), specifying the international standards applicable in Venezuela and determining their practical implementation, can give us different methods for the valuation of intangible assets. The advisable thing in these cases is to agree previously with the worker his/her participation, and in case of disagreement, the Labor Inspectorate will determine “a fair compensation” according to article 29 of the Regulations to the Organic Labor Law [6]

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[1] Organic Labor Law of June 19, 1997 and published in the Official Gazette of the Republic of Venezuela No. 5,152, amended on May 6, 2011 and published in the Official Gazette No. 6,024

[2] Supreme Court of Justice, Social Cassation Chamber, dated March 20, 2001, Sentence No. 431.

[3] Decree No. 8,938 with the Rank, Value and Force of Organic Labor Law, dated April 30, 2012 and published in the Official Gazette of the Bolivarian Republic of Venezuela No. 6,076, dated May 7, 2012.

[4] Agreement by which one party assigns to the other the use, whether exclusive or not, of certain economic rights for a specific time and for a specific territory in exchange for the payment of an economic consideration. (Diccionario de Propiedad Intelectual. Pág. 46 César Iglesias Rebolledo y Maria Gonzalez Gordon).

[5] See Section 18 Intangible Assets other than Goodwill, and Section 28 Employee Benefits of the International Financial Reporting Standard (IFRS) for Small and Medium-Sized Entities (IFRS for SMEs), See also IAS 38.

[6] Regulations to the Labor Law of April 28, 2006 and published in the Official Gazette of the Republic of Venezuela No. 38,426.