It is anticipated that the amended Invention Promotion Act (hereinafter “Amended Act”), which strengthens the compensation provided for inventions related to work duties (“work inventions”), will become effective as of January 31, 2014. As examined below, since, unlike the previous work inventions compensation system there are several important regulations under the Amended Act, companies should review/modify their work inventions compensation system prior to the implementation of the Amended Act.
  1. Review/Modify Regulations Regarding Succession of Work Indentations for Obtaining Non-Exclusive Licenses
Since previously if employees made inventions related to work duties employers obtained a non-exclusive license over such inventions, the rate of adoption of the work inventions compensation system was extremely low. Such issues were taken into account and a new proviso to Article 10(1) of the Amended Act stipulates that, besides small and medium sized companies as defined under Article 2 of the Framework Act on Small and Medium Enterprises (in the case of a manufacturing business, companies where the number of regular employees is over 300 and the capital or sales is over KRW 8 billion), if an employer desires to obtain a non-exclusive license, a contract which stipulates that such succession will occur needs to be executed or employment rules to such effect needs to be prepared in advance.
The purpose of the above is to promote the adoption of the compensation system for inventions related to work duties for conglomerates, which have relatively strong organizations, workforces and budgets, and, this would serve to establish a culture where interest in inventions related to work duties are increased and proper compensation for employees’ inventions for private companies are provided.
  1. Strengthening of Employee’s Procedural Rights for Compensation of Work Inventions
While previously there was no legal requirement to engage in discussions with employees for companies to amend/change their regulations regarding work inventions, the Amended Act makes this an obligation for companies. Also, the Amended Act has established a new provision where, in the case that the regulations regarding work inventions are changed in a manner that is disadvantageous to employees, the consent of the majority of the employee is required. Also, the employer must prepare a written compensation policy which contains information such as the type of compensation for work inventions, standards for determining the amount of compensation and method of paying compensation and provide this to the employees. Furthermore, the Amended Act requires that, when providing the compensation payment, a written document which stipulates specific matters such as the compensation amount determined pursuant to the compensation policy needs to be provided to the applicable employee
  1. If the Employer Abides by the Procedures Under the Regulations Regarding Work Inventions When Providing Compensation, it is Deemed to be Proper
Under the Amended Act, in the event that the employer abides by the strict procedural requirements as noted above and provides compensation to an employee for a work invention pursuant to the compensation policy, this is deemed to be a proper compensation. However, companies need to be mindful that compensation which does not take into account the profits that the employer will make based on the invention related to work duties or the degree of contribution of the employer and employee in completing the invention will not be deemed to be proper compensation.
  1. Guarantee That Employees Can Participate in the Establishment/Operation of a Work Invention Committee
Since previously there was only a theoretical regulation which noted that an evaluation committee for work inventions may be established, in the event that disputes occurred regarding compensation for inventions related to work duties the only method that could be used was to request mediation to the Intellectual Property Rights Dispute Committee. However, under the Amended Act, in the case that there is a different view regarding the regulations on work inventions or compensation and there is a request by the employee to review such issue, the employer must establish a committee within 60 days and examine the requested issue. If the employer does not comply with the above, it would be subject to fines. Meanwhile, a new obligatory provision that one or more consultants that are experts in work inventions must be included in the committee was established.
Meanwhile, the pre-announcement of legislation for the Enforcement Decree to the Amended Act was made and, the Enforcement Decree contains new provisions regarding procedures for engaging in discussions on the compensation policy for work inventions, establishing an internal committee for invention related to work duties and dispatching of consultants. Further, the Enforcement Decree contains a new provision regarding the standards for imposition of fines in the case that a committee is not established or a consultant leaks information regarding work inventions.