[Case Playback]

When working in the defendant Shanghai Zhongji Company, the plaintiff Mr. Liang totally completed 44 utility model patents and 19 design patents as the inventor and designer. According to the defendant’s reward scheme, the reward money for each utility model patent is 500 to 10,000 CN, and the reward money for each design patent is 300 to 8,000 CN. Upon assessment, the defendant determines the reward money for 43 utility model patents claimed by the plaintiff, each is from 500 to 4,000 CN and the sum is 25,000 CN. The plaintiff alleges that the defendant shall reward 1,000 CN for each utility model patent or design patent according to the Chinese Patent Law, and thus the defendant shall reward 63,000 CN to the plaintiff. The defendant argues that its rules and regulations have specified the reward for the inventor and designer of the service invention-creation, thus the specified amount of money shall be paid to the plaintiff.

Upon trial, the court considers that the defendant assesses 43 utility model patents among the involved patents, and determines the specific reward amount. Although disagreeing to the reward amount determined by the assessment, the plaintiff does not submit any opposite evidence to prove that the reward amount determined by the assessment is unreasonable, thus the court confirms the total reward amount 25,000 CN for the 43 utility model patents. As to the unassessesd 1 utility model patent and 19 design patents, the court conditionally confirms the reward amount in conjunction with the reward range specified in the reward scheme by the defendant and the actual situations of the above patents. Thus the court judges that the defendant shall pay the reward of 45,000 CN for the inventor and designer of the service innovation-creation to the plaintiff. After the first instance judgment, the parties involved do not appeal to the higher court, and the judgment has come into effect.

[Three mainstream opinions]

As specified in Rule 77 of the Implementing Regulations of the Chinese Patent Law, where an entity to which a patent right is granted has not entered into an agreement with the inventor or designer on the manner and amount of the reward as prescribed in Article 16 of the Chinese Patent Law, nor has the entity provided it in its rules and regulations formulated legally, it shall, within three months from the date of the announcement of the grant of the patent right, award to the inventor or designer of a reward. Thus the reward amount of service invention shall be determined in a principle of “priority of agreement”. But when the service invention reward agreed between the entity and inventor or specified in the rules and regulations of the entity is a range rather than a specific amount, how to determine the reward amount?

The first opinion: when the reward amount specified by the entity is a range, the agreement is ambiguous, and it shall be deemed that there is no agreement between the entity and inventor. Once a service invention reward dispute occurs, the court shall determine the reward amount deserved to the inventor according to the reward standard specified in the Implementing Regulations of the Chinese Patent Law.

The second opinion: in a case where the reward amount agreed between the entity and inventor is a range rather than a specific amount, when the entity and inventor specify a reward amount for the involved patent before prosecution, the court may determine the final reward amount according to the specified reward amount; and when a specific reward amount is not specified before prosecution, the court may determine the final reward amount according to the legal standard.

The third opinion: the principle of “priority of agreement” means that the agreement between the entity and inventor is applicable regardless of the legal standard. Once the agreement is not invalid or cancelled, and the entity and inventor do not specify the reward amount for the involved patent before prosecution even if the agreement is ambiguous, the agreement between the entity and inventor is still valid, and the reward amount conditionally determined by the court may be higher or lower than the legal standard, without being restricted thereby.

[The judge’s response]

When the agreement is ambiguous, the reward amount shall be determined conditionally within the agreed range.

Currently, Shanghai Intellectual Property Court adopts the third opinion, i.e., unless the agreement between the entity and inventor is invalid, cancelled, etc., the agreement is applicable regardless of the legal standard. In a case where the agreed reward amount is a range, if a specific amount is specified by the entity before prosecution, the reward amount is determined according to the amount, and if no specific amount is specified by the entity before prosecution, the court shall conditionally determine the reward amount, which may be higher or lower than the legal standard, without being restricted thereby. The court shall not determine the final reward amount according to the legal provisions directly.

Determination of the reward amount of service invention

Firstly, the determination of the reward amount of service invention shall fully respect the autonomy of will of the entity and inventor, and it is inappropriate to rashly deny the efficacy of the agreement. Once the entity does not abuse its power and status as an administrator, and the agreement between both parties for the service invention reward is their true declarations of intention, the agreement shall be legally recognized even if it is not a specific amount.

Secondly, when the agreement is ambiguous, the entity shall determine the reward amount based on the public assessment procedure. Although the entity determines the actual reward amount before prosecution, if no public assessment procedure is performed, e.g., the reward amount is personally determined by the head of the entity or department, the reward amount shall not be recognized by the court since there is no proper procedure.

Thirdly, if the entity does not specify the actual reward amount before prosecution, or the specified reward amount is not accepted by the court, the court shall conditionally determine the final reward amount.

When determining the service invention reward, the court may comprehensively consider the following factors:

  1. The degree of inventiveness of the involved patent;
  2. The contribution of the involved patent to the entity;
  3. The duty or status of the inventor in the entity; and an inventor with a higher duty shall obtain a less reward than an inventor with a lower duty;
  4. The contribution made by the entity to the completion of the patent; if a certain patent is mainly completed based on the existing technical data of the entity, and the inventor just makes an improvement on this basis, the reward for such a patent shall be obviously lower than that for an innovative invention or a service invention which is completed mainly based on the contribution of the inventor.