China: Right to inventions made in the course of employment

27 February 2013

Grace Chen, Lu Rong

On 5 January 2013, the State Intellectual Property Office, the Ministry of Education, the Ministry of Science and Technology, the Ministry of Industry and Information along with nine other government authorities jointly issued a notice entitled “Several Opinions on Further Strengthening the Protection of the Legitimate Rights and Interests of Inventors of Service Inventions to Promote the Application and Implementation of Intellectual Property Rights” (hereinafter the “Opinion”). 

The Opinion represents the Chinese government’s effort to carry out its current ten-year plan (2010 – 2020) for the mid to long-term development of talents and builds upon the existing legislative framework provided by China’s patent regime and other related regulations.  The focus is to protect the rights and interests of those who create inventions in the course of their employment (i.e., “Inventors”) in an effort to promote and encourage innovation by these individuals.   

The Opinion calls for State-owned enterprises and institutions and military entities to establish robust systems of rules and regulations that clearly set out the responsibilities, rights and obligations of all parties, consisting of systems for reporting of innovations, management of the service inventions, rewarding and remunerating of inventors.  The Opinion also provide for measures to protect the lawful rights and interests of Inventors and to encourage them to participate in the use and implementation of service inventions and the intellectual property rights related thereto.  Specific actions include encouraging entities and Inventors to enter into agreements addressing the ownership of the intellectual property rights underlying the inventions, supporting Inventors to obtain IP rights that are to be abandoned by State-established institutions of higher education and research institutes (the “Institutions”), and encouraging active participation on the part of these Inventors in seeking to use and implementation of intellectual property that these Institutions have not been able to utilize for more than two years.  

The Opinion seeks to safeguard the Inventors’ the right of attribution in patent documents and other relevant documents; it also calls for an increase in the proportion of remuneration for service inventions; a means for determining the reasonable amount of remuneration for service inventions; prompt offering of awards and remuneration to Inventors (generally within three months of the relevant milestone, e.g., the granting of intellectual property rights, receipt of license or assignment fees, etc.); and protection of an Inventor’s right to obtain rewards and remuneration in particular circumstances, for example, the survival of such rights after the employment relationship has ended and the ability to have an Inventor’s heirs succeed to such rights, however, the Opinion permits employers to enter into agreements with their Inventor employees that provide for alternative arrangements.  Although the Opinion appears to be primarily intended for State-owned institutions and enterprises, it would be prudent for private companies to establish clear invention assignment policies and incorporate relevant agreements as part of the standard employment arrangement to avoid situations where past or present Inventor employees may assert certain rights over service inventions that they have contributed to. 

The Opinion sets out general guidelines and do not appear to have incorporated specific requirements or prohibitions.  This may well be a precursor of more comprehensive legislation on this subject, most notably the Service Invention Regulations, a draft of which was circulated for public comment by China’s State Intellectual Property Office (SIPO) late last year and is one of the regulations identified by SIPO for fast-track legislation in 2013.

This article is part of the Asia Employment newsletter for March 2013.