Finnish inventions - going cheap
Matti Makkonen, the father of SMS messaging, didn't earn a cent for his idea
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By Tuomo Pietiläinen
Engineer Matti Makkonen, 54, got a telephone call from the telecommunications service provider Sonera two years ago. Sonera wanted to know his bank account number so they might send him a royalty payment.
Woah!
Had the day finally arrived when Makkonen would get compensation for his idea that changed the lives of hundreds of millions of people? After all, Makkonen has been called the father of the text message. Because of his idea, more than 500 billion SMS messages are sent by mobile phone users around the world.
Sonera deposited EUR 300 on Makkonen's account.
The payment from Sonera had nothing to do with text messages. It involved a telephone exchange innovation that he had already forgotten. Makkonen had been part of a group that developed the operations of a mobile telephone exchange.
Makkonen ultimately did not get a cent for developing text messages. He also got no money from his idea for changing phone numbers of the old NMT mobile standard to GSM, even though the innovation helped Sonera get a large number of customers for its new digital mobile phone network.
"The 300 euro royalty was actually kind of funny", Makkonen says.
However, during the past decade Makkonen has actually been anything but amused.
"At the turn of the millennium I tried to forget that I could have been a millionaire. Now there is enough distance for me to concede: I am upset that I got such paltry compensation", Makkonen says.
Makkonen's disappointment is understandable. If he were to get only one tenth of a percent of the financial yield of all of the text messages sent in the world, he would earn EUR 50 million a year.
So how can such a trailblazer of mobile telephony to be treated so unfairly?
In principle, Makkonen's affairs should be in order: under the law on job-related inventions, he is entitled to a "reasonable compensation" for ideas and inventions that have been beneficial for the company he works for. The statute even has a mathematical formula for calculating the royalty.
It does not go that way in practice. Even if an employee produces a significant invention, he or she usually has to make do with a basic fee of a few thousand euros, and possibly about ten thousand in licencing royalties.
The paper and paperboard manufacturer M-real pays lump sums of EUR 5,000, EUR 15,000, or EUR 30,000 in return for a waiver of royalties. If the inventor prefers an annual royalty payment, it has to be negotiated separately.
Nokia, the world's largest mobile telephone manufacturer, actually pays a mandatory fee of EUR 100,000 for "very useful inventions".
Fees paid to inventors are meagre compared to the millions that corporate executives are able to take home each year. Stock option profits can appear on an executive's bank account as a result of good luck, - not directly linked with any effort on the part of the executive who is cashing in. On the other hand, the value of a patented invention is usually easy to calculate.
One executive in a large listed company can earn more in a year than all of the inventors combined. This is the case also with Nokia, which pays "millions of euros" a year for all of the inventions developed by people on its payroll. These can number up to 1,200 a year.
In other listed companies, the sums in question are smaller. The paper manufacturer UPM-Kymmene pays its employees an annual fee of EUR 56,000 for patented inventions. Stora Enso pays EUR 15,000 and Kone pays about EUR 100,000, in addition to bonuses for particularly significant innovations.
Yrjö Rinta-Jouppi, chairman of the Central Organisation of Finnish Inventors sees clear reasons for this "bargain sale of intellectual property".
"The compensation level has not been stabilised, and employers want to maintain the impression that all is well. The consultants who draw up the incentive arrangements do not want to reward inventors, because they do not decide on the introduction of incentive systems", Rinta-Jouppi says.
"Often people say that they do not want to invent anything any more", he adds.
Eero Lohikoski, chairman of the association of hired inventors feels that the problem is that not all large companies even have systems that support inventiveness.
"Only the most tenacious have the energy to promote their ideas and their inventions to the point of getting a patent", Lohikoski says.
Juha Jutila, executive director of the Foundation for Finnish Inventions, points out that without inventors, all business activities will come to an end sooner or later.
"Inventiveness in a company is the alpha and omega of everything. There really is a certain imbalance between payments for inventions and millions earned from stock options", Jutila says.
Among employers, the issue of rewards for inventions and patents is viewed somewhat differently. Patent agent Christer Sundman points out that a patented invention is often something that is completely unfinished, and has a long way to go before it reaches the market.
"An invention can look promising, but it might not amount to anything. In addition to the costs of product development, there are the patent maintenance fees - that is, the employer carries the risk", says Sundman, who represents large listed companies.
Sundman says that the same employee can come up with as many as ten inventions in a year.
"That amounts to quite a reasonable compensation for one's work", Sundman says, adding that the situation of inventors working for an employer is weaker in other European countries than it is in Finland. For instance, in Britain, there is no recompense.
Finnish inventors would not appear to have much reason to expect major increases in their earnings from a harmonisation with the rest of the EU.
The only hope would seem to be for inventiveness to get as much respect as corporate management.
"Inventors simply have not crossed the minds of incentive consultants", says Yrjö Rinta-Jouppi.
But what would Matti Makkonen do to get ideas and inventions the value they deserve?
He feels that present legislation on inventions does not work, and that rewarding people for ideas and inventions should be made part of labour contracts.
"In this way, ideas and inventions would be rewarded automatically. At the same time it would be worth paying more than a few hundred euros for a useful invention", Makkonen says with a somewhat forced laugh.
Helsingin Sanomat / First published in print 11.6.2006
TUOMO PIETILÄINEN / Helsingin Sanomat
tuomo.pietilainen@hs.fi
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| 13.6.2006 - THIS WEEK |
 Finnish inventions - going cheap |
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