1. What Is a Service Invention?

According to Article 6 of the Patent Law of the People’s Republic of China, an invention-creation (invention-creation means invention, utility model or design) that is accomplished by a person in execution of the tasks of the entity to which he belongs, or mainly by using the material and technical conditions of the entity shall be deemed a service invention-creation. For a service invention-creation, the entity has the right to apply for a patent. After such application is granted, the entity shall be the patentee. For an invention-creation that is accomplished by using the material and technical conditions of the entity, if the employer has concluded a contract with the inventor or designer (below called “inventor” collectively) providing the ownership of the right to apply for the patent or the ownership of the patent right, such provision shall prevail.

A service invention-creation made by a person in execution of the tasks of the entity to which he belongs referred to in Article 6 of the Patent Law means any invention-creation made:

  1. in the course of performing his own duty;
  2. in execution of any task, other than his own duty, which was entrusted to him by the entity to which he belongs; or
  3. within one year from his retirement, resignation or from termination of his employment or personnel relationship with the entity to which he previously belongs, where the invention-creation relates to his own duty or any other task entrusted to him by the entity to which he previously belongs.

The entity to which he belongs referred to in Article 6 of the Patent Law includes the entity in which the person concerned is a temporary staff member; material and technical means of the entity referred to in Article 6 of the Patent Law mean the entity's money, equipment, spare parts, raw materials or technical materials which are not available to the public, etc.

  1. Reward and Remuneration to Service Invention

According to Article 16 of the Patent Law, the entity to whom a patent is granted shall reward the inventor of the service invention. After such patent is exploited, the inventor shall be given a reasonable amount of remuneration according to the scope of application and the economic results.

As for the specific manners of the reward or remuneration, the agreement between the entity and the inventor is given priority. It could be monetary, shares, promotion of position, increase of salary, etc.

If no agreement exists or the agreement is obviously unreasonable, the following statutory standards shall apply:

  1. Statutory Standards for Reward(※1):

The entity shall, within three months from the date of the announcement of the grant of the patent right, accord to the inventor a sum of money as prize. The money prize for a patent for invention shall be a minimum of 3,000 yuan(USD470); the money prize for a patent for utility model or design shall be a minimum of 1,000 yuan.(USD160)

Where an invention-creation is made on the basis of an inventor's proposal adopted by the entity to which he belongs, the entity shall accord to him a money prize on favorable terms.

  1. Statutory Standards for Remuneration(※2):

The entity shall, after the patent for invention-creation is exploited within the duration of the patent right, draw each year from the profits from exploitation of the patent for the invention or utility model a percentage of not less than 2%, or from the profits from exploitation of the patent for the design a percentage of not less than 0.2%, and award it to the inventor as remuneration.

The entity may, as an alternative, by making reference to the said percentage, award a lump sum of money to the inventor as remuneration once and for all. Where an entity to which a patent right is granted authorizes any other entity or individual to exploit its patent, it shall draw from the exploitation fee it receives a percentage of not less than 10% and award it to the inventor as remuneration.

If any dispute in respect of ownership of the patent right or remuneration to the inventor arises, the parties could settle it by negotiations, administrative actions (i.e. mediation by the patent administration) or jurisdiction actions (i.e. lawsuit to a court).

(※1)Article 77 of the Rules for the Implementation of the Patent Law of the People’s Republic of China

(※2)Article 78 of the Rules for the Implementation of the Patent Law of the People’s Republic of China