The State Intellectual Property Office (SIPO), jointly with 12 other authorities, issued “Several Opinions Concerning Further Strengthening the Protection of Legitimate Rights and Interests of the Inventors for Service Inventions and Promoting the Application and Implementation of Intellectual Property Rights” (hereinafter referred to as “Opinions”) on Jan 7, 2013.

The “Opinions” is aiming at implementing “The Outline for the Development and Planning of Talents in Medium Term and Long Term: from 2010 to 2020”, protecting the legitimate rights and interests of the inventors for service inventions, giving full play to the role of creative scientific talents, and constructing a powerful country with innovation and talents. The “Opinions” mainly includes the following five aspects:

  1. Fully realizing the importance of strengthening the protection of legitimate rights and interests of the service inventor;
  2. Laying down the general requirements for strengthening the protection of legitimate rights and interests of the service inventor;
  3. Establishing and perfecting rules and regulations, clarifying responsibilities, rights and obligations;
  4. Protecting the legitimate rights and interests of the inventors for service inventions, encouraging the inventors to participate in the application and implementation of service inventions and the intellectual property rights thereof;
  5. Improving policies and measures for the protection of legitimate rights and interests of the inventors for service inventions, enhancing supervision on the protection of legitimate rights and interests of the inventors for service inventions.

In particular, the “Opinions” clearly deals with the service inventions created in state-owned enterprises and institutions as well as military entities.

Comments

The SIPO issued a notification on its official website on Nov. 12, 2012, regarding “Invitation for Comments from the Public on the Draft Regulations on Service Invention”. The "Regulations" was drafted in accordance with “The Outline for the Development and Planning of Talents in Medium Term and Long Term: from 2010 to 2020”, and was aiming at protecting legitimate rights and interests of the creators of technological achievements, implementing the strategy of making the country powerful and prosperous with talents by means of science and education, perfecting and improving the incentive mechanism and the allotment of rights and interests conducive to the application and implementation of service inventions and the intellectual property rights thereof. After the above notification was issued, it caused wide public response and triggered hot discussions on the related issues. Up to now, the Draft Regulations has not yet been passed to become a formal legal regulation.

The “Opinions” issued by the SIPO jointly with 12 other authorities on Jan. 7, 2013, is an administrative regulation, which fully reflects that the national policy grants great importance to the protection of service inventions as well as the corresponding rights and interests for the inventors. The "Opinions" again attracted the public's attention to the service inventions.

It’s worthy of note that, the “Opinions” indicate the principle of "Agreement Prevails" regarding the ownership of service inventions as well as the award and remuneration of the inventors for service inventions, while specifying the right of authorship for the inventors . The “Opinions” meanwhile equilibrates the rights and the obligations between the inventors for service inventions and their affiliated entity, ensures that the inventors obtain reasonable award and remuneration in a timely manner and implements and perfects the preferential tax policy regarding the award and remuneration awarded to the inventors. These policies will promote motivation of technical talents and their affiliated entity in technological innovation and transformation, and will play an important role in the encouragement of innovation and personnel training.

Further, it is worth noting that, the following four aspects specified in the “Opinions” shall only be applicable for the state-owned enterprises and institutions as well as military entities:

  1. Establishing the reporting system of service inventions;
  2. Establishing the management system related to service inventions;
  3. Establishing and perfecting the award and remuneration system for service inventions; and
  4. Increasing the remuneration rates of service inventions.

Regarding the above (4), the "Opinions" specify the following : In the situation that no agreement has been made between the inventor(s) for a service inventions and the entity to which he(they) belong or no internal rules and bylaws regarding the remuneration has been provided, where the state-owned enterprise and institution as well as military entity implements the service invention(s) by its own, the total remuneration to all inventors contributing to the service invention shall not be less than 3% of the business profit gained from implementing the patent of the service invention. As to transfer or licensing of the patent, or contribution with the patent in terms of shares, the total remuneration shall not be less than 20% of the transfer payment, the license fee or contribution of capital. It can be seen that the remuneration rate for the inventors of service inventions is increased, though this may not be consistent with Rule 78 of the current Implementing Regulations of the Patent Law.

As to the private sector, including joint ventures and individual proprietorship enterprises, etc., the “Opinions” does not make explicit requirements regarding the above mentioned four aspects. Therefore, the concerns of the private sector remain, especially regarding the rate of the remuneration for the inventors of service inventions, or in other words, the minimum requirement. Since the published draft "Regulations on Service Inventions" is pending, we would suggest that the concerned issues raised from the public could be clarified in its formal version.

In summary, the issuance of the "Opinions" gives a signal to strengthen the protection for the legitimate rights and interests of the inventors for service inventions. The Chinese entities need to take the "Opinions" into consideration seriously. On the one hand, the entities may consider reaching an agreement with the inventors for service inventions or stipulating internal rules and bylaws to determine the ownership right of the inventions and the reasonable award/remuneration for the inventors so that subsequent disputes may be avoided, on the other hand, the entities may use the system of award and remuneration to encourage the inventors for service inventions in the application and implementation of the intellectual property rights as well as develop their independent intellectual property rights. For all sectors, it needs to comply with the related requirements set forth in Chapter 6 of the current Implementing Regulations of the Patent Law, and it would be better to make good preparation for the possible change in the future.