According to Article 7(1) of the Patent Act:
"Where an invention, a utility model, or a design is made by an employee in the course of performing his/her duties, the right to apply for a patent and the patent right thereof shall be vested in his/her employer and the employer shall pay the employee reasonable remuneration; where there is an agreement providing otherwise, such agreement shall prevail."
Therefore, in the event of doubt with respect to the ownership of a patent resulting from research undertaken by an employee during his or her tenure, the first question to be addressed is whether such research was carried out "in the course of performing the employee's duties", and whether any special agreement was concluded between the parties.
Lower court decision
On November 14 2013 the IP Court (2013 Min-Zhuan-Shang-20) considered how to determine what constitutes an "invention produced in the course of employment".
B was the general manager of company A. Both parties had previously agreed by way of contract that if B used A's resources for his research, any results from that research would be shared by both parties. During B's employment, A's chairman provided B with ideas, photographs and opinions for the development of new products. A instructed B to develop new products, following which B proposed his research ideas for a new product. B also leveraged A's manpower and funds to produce drawings, models and production moulds. Eventually, B solely applied for a new utility model patent, Y, based on the research results and named himself as the sole inventor. All patent application expenses were paid by A. Under these circumstances, A claimed that the invention should vest in it on the grounds that it had been made during the course of B's employment; or if it had not been made in the course of B's employment, it should vest in both parties as joint owners according to the agreed contract.
The court ruled in B's favour, despite A presenting numerous witnesses to prove that B had not undertaken the research for the invention independently. The court accepted B's argument that the provision of ideas by A's chairman was intended merely in order to promote A's business and was not essential information for the patent's development. In addition, any such ideas and materials were pure concepts or suggestions (ie, they contained no essential technology for the patent). Although A's engineers had assisted in drafting the patent drawings and specification, these were merely documents essential to the patent application administrative process and the engineers thus had no substantive involvement in the research process. As for A's staff providing assistance in making models and producing moulds, this assistance was likewise provided with respect to the production process and was therefore unrelated to research and invention. Based on this, the court rejected the claim that the patent was a creation completed by B during his employment with A.
As for A's claim that both sides had agreed to share the results of any research that B conducted using A's resources, the court took the view that the term 'sharing of research results' in the contract did not amount to an agreement on joint ownership of the patent. Further, A had raised no objections to B's application for the patent in his own name. Accordingly, the court rejected A's claims.
The case was appealed to the Supreme Court. On July 17 2014 the Supreme Court (2014 Tai-Shang-1479) overturned and remanded the IP Court's decision. According to the Supreme Court, since both sides had expressly agreed to share the research results if B used A's resources to conduct research, the IP Court's interpretation ran counter to common sense by saying that this did not amount to both sides "having joint ownership of the patent right". The Supreme Court further pointed out that as A had paid the patent application expenses, offered development ideas, drafted drawings and entered into oral communication with B during the drafting of drawings, and participated in negotiations for the manufacture and production of moulds, its claim that the patent was jointly owned was therefore not without merit and should be accorded due consideration. As to the IP Court's decision that "the technical content of Patent Y was not a creation completed by Party B during his employment with Party A", the Supreme Court expressed no different opinions.
For further information on this topic please contact Hsiu-Ru Chien or Shih-I Wu at Lee and Li Attorneys at Law by telephone (+886 2 2715 3300) or email (firstname.lastname@example.org or email@example.com). The Lee and Li website can be accessed at www.leeandli.com.
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