An effective invention incentive program is an important adjunct to a company’s creativity effort. The incentive program includes both financial and nonfinancial rewards. Incentives may be for disclosures, patent applications, patents as well as trade secrets. One of the key findings is that companies often get what they pay for. If there is no incentive for intellectual property development innovation efforts are likewise found to be at a low level. On the other hand, some companies experimented with very large incentives and found that what they achieved was large numbers of disclosures, patent applications and patents. They also observed that the work was of poorer quality than when the incentives were lower. The key is to strike a balance in-between. In striking the best balance it was found that nonfinancial measures play a big role.

From a design standpoint an incentive reward system works well when:

  • It ensures both the flow of new innovations and supports IP commercialization initiatives.
  • Is congruent with the corporate culture; e.g., Sharing royalties may only work in selected situations.
  • Both monetary and nonmonetary rewards should be used as forms of recognition.
  • Nonmonetary rewards, such as plaques, certificates, crystal, coins, and banquets, luncheons or dinners are highly appreciated forms of recognition and always should be part of inventor incentive system.

Incentives for invention disclosures vary widely. For companies in Europe inventor incentives are often based on royalties of commercialized products and amounts dictated by government regulation. In surveys of US-based companies it’s typically found that over half the companies do not provide any rewards for submitting a disclosure. For those that did provide rewards for disclosures they range between $100 and $1,000 per inventor, reflecting the quality of the invention and the number of team members.

For patent applications almost all US companies provide an inventor reward. They range between $500-$1,000 per inventor. For patent grants around half companies provided some form of monetary award. In around half of these companies the award upon patent grant was in addition to an award upon patent application. For the others it was just given upon patent grant.

An innovative approach to inventor incentives was to give gold coins for granted patents. The coin’s value ranged between $500 and $1,000. Usually during a banquet presentation of the coin the symbols on the coin were used to create a story about the inventor, organization, or invention. This gave the coin both a strong financial, emotional and aesthetic component. It was found that it was highly treasured by both the inventor and the inventor’s family. They became a sought after symbol of accomplishment.