On June 24th, 2013, Shanghai High Court issued the "Guidelines on Trial of Disputes over Rewards and Remuneration for Inventors or Designers of Service Invention or Creation" (the “Guidelines”), effective as of the release date.

The Guidelines mainly regulates reward and remuneration for service invention or creation, including:

  1. The employer may reach agreement with the inventor or designer regarding the reward and remuneration for service invention or creation, including:
  • The method of reward and remuneration: besides monetary form, the reward and remuneration may be in other forms, including shares, options, promotion, salary increment, paid leave, etc, provided that the principle of reasonableness stipulated in the Patent Law is satisfied;
  • The agreed amount of reward and remuneration may be lower than the statutory standard: Where the agreed remuneration is in monetary form, the agreed amount may be higher or lower than the statutory standard.
  1. If the amount of reward and remuneration agreed by the parties is extremely low and evidently unreasonable, the court cannot directly adopt the statutory standard in deciding the amount of reward and remuneration; instead, the court should abide by the principle of reasonableness stipulated in the Patent Law and decide the reasonable amount of reward and remuneration based on the specific circumstances of the case.
  2. In the case of commissioned and cooperative development, the prerequisite that the inventor or designer of service invention or creation request payment of reward and remuneration is that the inventor or designer shall be an employee of the company which is granted the patent. For instance, in the case of commissioned development,
  3. In the case of labor dispatch, dispatched employees may claim against the employer for reward and remuneration for a service invention or creation.
  4. A two-year limitation of action period shall apply to disputes over reward and remuneration for service invention or creation; the limitation of action period shall commence from the date on which the plaintiff becomes or should become aware of the infringement of rights, regardless of whether the employment relationship has been terminated or not on such date.

Furthermore, the Guidelines also stipulate in details such issues as the examination on the reasonableness of agreement, the determination of the amount of statutory rewards and remuneration, jurisdiction, etc.

KWM comments: Among the many detailed provisions provided in the Guidelines, one of the highlights is that in spite of the statutory standard stipulated in the patent law, the employer may agree with the inventor or designer regarding the amount of the reward and remuneration for service invention or creation, which may be higher or lower than the statutory standard. Employers in Shanghai should pay special attention to Guidelines,which is of important guiding significance in practice.