The State Intellectual Property Office (SIPO) recently released the Consultation Draft of Regulations on Service Inventions (the “Draft Regulation”) for public comments.

The Draft Regulation stipulates that the principle of “agreement takes priority” shall apply with respect to the rights over the service inventions and the reward and remuneration for the service inventions, but such agreements reached between the employee inventor and the employer shall not limit or nullify the employee inventor’s rights. If there is no contractual agreement or company policy regarding rewards and remuneration, the Draft Regulation provides specific rewards and remuneration which will be payable to the employees as a default arrangement, namely:

  1. For service inventions that are granted with patent rights or new plant varietal rights, the employer shall pay all the inventors an reward in the total amount of no less than 200% of the average monthly salary of the employer’s on-post staff; for service inventions that are granted with other intellectual property rights, the total amount of reward for all the inventors shall be no less than the average monthly salary of the employer’s on-post staff.
  2. For exploitation of the patent rights of service inventions, the employer shall pay remuneration to all the inventions by either one of the four standards provided by the Draft Regulation, such as no less than 5% of the profit or no less than 0.5% of the sales income generated from implementation of an invention patent, or no less than 3% of the profit or no less than 0.3% of the sales income generated from implementation of a utility model or design patent.
  3. If the employer assigns or licenses the patent rights of service inventions, the employer shall pay remuneration to the inventors in an total amount of no less than 20% of the net income from such assignment or licensing.

In addition, pursuant to the Draft Regulation, the employer may set forth the procedures, methods and amounts for granting the rewards and remuneration in the employer’s internal policies duly formulated, and shall notify the employee inventors of their rights and remedies in such internal policies. Further, the employer’s internal policies which limit or nullify the employee inventors’ rights are invalid.

KWM Comments:

In light of the Draft Regulation, the employer may reach agreements with the employees or duly formulate/amend its internal policies to set forth the procedure, methods and amounts of reward and remuneration for service inventions. However, it should be noted that the agreements or the internal policies shall not limit or nullify the employee inventors’ rights. In the absence of both contractual agreements and internal policies, the default arrangement provided by law shall apply.