On November 15, 2012, the Supreme Court ruled in detail about the rights an employer has to an employee invention where a contract provides for an automatic assignment of the rights to an employee invention (Supreme Court Decision, Case No. 2012 Do 6676, November 15, 2012). This decision is significant in that it is the first Supreme Court decision that confirms previous decisions from the lower courts and that it offers the court’s ruling on issues that were never dealt with before. The details of the Supreme Court’s decision are as follows:
- If a contract or an employment rule provides for an assignment or granting of an exclusive license to the employer for all inventions including those that are not employee inventions, the contract provision or the employment rule will only be valid with respect to the employee inventions. In such case, even if the contract or the employment rule does not provide for compensation for such assignment or granting of an exclusive license, the employee shall have the right to receive an appropriate compensation with respect to the employee invention.
- Under Patent Act, co-inventors share the right to obtain a patent registration, and one co-inventor requires consent from the other co-inventor to assign his/her share of the patent. However, Article 14 of the Invention Promotion Act provides that where the invention is created jointly by an employee with a third party, the rights attributed to the employee may be assigned to the employer if a contract or the employment rules so stipulates, and does not require a consent from any third party for such assignment. As such, under this regulatory scheme, the employer may obtain assignment of the rights to an employee invention without consent from the third party joint inventor.
- If an employee, who is under a contract or the employment rules to assign any employee inventions to the employer, fails to notify the existence of an employee invention to the employer and then assigns the right to an employee invention to a third party causing that third party to obtain a patent registration thereby disclosing the invention to the public, such act by the employee constitutes a breach of trust under the Criminal Code.
- In principle, the rights to the employee invention belong to the employee-inventor, and as such, until the rights are assigned to the employer, such employee invention cannot be considered the employer’s trade secret. Therefore, even if the employee discloses the invention in violation of his/her confidentiality obligations and non-compliance of his/her obligation to cooperate with the assignment process, such act will not be considered a trade secret misappropriation as defined under the Unfair Competition Prevention and Trade Secret Protection Act. Provided, however, if the employer’s technical information contained in the employee invention is disclosed by way of the employee invention disclosure, such act may constitute a trade secret misappropriation.