· Area of Law： General Provisions on Intellectual Property

· Level of Authority： Local Judicial Documents

· Status： Effective

· Issuing Authority： Higher People's Court of Shanghai Municipality

Guidelines for Hearing Disputes Arising from Awards or Remunerations to the Inventors or Designers of Service Invention-Creations
(Intellectual Property Tribunal of Shanghai Municipal Higher People's Court, 2013)
Article 1 [Scope of Application] The provisions of the Patent Law and the Detailed Rules for the Implementation of the Patent Law on award and remuneration rules for service invention-creations shall apply to invention-creations completed in the Mainland of China.
First, the attribution of patent right shall be determined based on the place where the invention-creation is completed. The said principle for determining the attribution of rights meets the expectations of both parties of the enterprise and employees (employer and employees) on the attribution of rights to invention-creations, since in general, the enterprise and employees (employer and employees) always predict legal consequences based on the provisions of local laws.
Second, corresponding to the scope of application of the provisions of the Patent Law and the Detailed Rules for the Implementation of the Patent Law on service invention-creations and non-service invention-creations, the scope of application of the provisions of the Patent Law and the Detailed Rules for the Implementation of the Patent Law on award and remuneration rules for service invention-creations shall also be based on the places where the invention-creations are completed.
“The scope of application of the provisions of the Patent Law and the Detailed Rules for the Implementation of the Patent Law on award and remuneration rules for service invention-creations shall be based on the places where the invention-creations are completed.” has two meanings. First, for an invention-creation completed in the Mainland of China, if the patent is applied for in the Mainland of China, the inventor or designer of the service invention-creation shall be entitled to claim corresponding award and remuneration in accordance with China's Patent Law and the Detailed Rules for the Implementation of the Patent Law. Second, for an invention-creation completed in the Mainland of China, if the patent is applied for in a foreign country, and the invention-creation is determined as a service invention-creation in accordance with China's Patent Law and the Detailed Rules for the Implementation of the Patent Law, the inventor or designer of the service invention-creation shall be entitled to claim corresponding award and remuneration in accordance with China's Patent Law and the Detailed Rules for the Implementation of the Patent Law.
Article 2 [Giving priority to agreement] In accordance with the provisions of the Detailed Rules for the Implementation of the Patent Law, an entity which is granted a patent right may reach an agreement with the inventor or designer with regard to the award and remuneration for a service invention-creation. If an agreement is reached, they shall determine the corresponding award and remuneration for the service invention-creation based on their agreement; and if there is no agreement, they shall determine the award and remuneration corresponding to the service invention-creation based on the standards prescribed in the Detailed Rules for the Implementation of the Patent Law.
Article 3 [Form of agreement] In accordance with the provisions of the Detailed Rules for the Implementation of the Patent Law, the standard of award and remuneration for a service invention-creation may be agreed upon by the entity and inventor or designer through consultation, or may be stipulated in the bylaws formulated by the entity in accordance with law.
Article 4 [Contents of agreement] In accordance with the provisions of the Detailed Rules for the Implementation of the Patent Law, an entity which is granted a patent right may reach an agreement with the inventor or designer of a service invention-creation with regard to the form and amount of award and remuneration for the service invention-creation. They may agree on not only the amount of award and remuneration, but also the form of award and remuneration.
Under the principle of giving priority to agreement, award and remuneration may be paid in multiple forms such as giving stocks and options, promoting position, raising wages, and offering paid leave, in addition to the monetary form, as long as the reasonableness principle prescribed by the Patent Law can be satisfied.
If it is agreed that award and remuneration shall be paid in the monetary form, the prescribed amount may be higher or lower than the statutory standard, and an entity may independently determine corresponding specific standards based on its industrial features, production, research and development, and the requirements for the strategic development of intellectual property rights. In the actual implementation of the provisions on awards and remunerations for service invention-creations, some enterprises implement the aforesaid provisions in the form of offering the patent application award, patent grant award, and paying remuneration after patent exploitation; and some enterprises offer a lump-sum compensation for award and remuneration, and determine the specific total amount of compensation based on the average value of invention in research and development fields, and for enterprises, the complicated computational process and higher computational cost may be avoided if such a form is adopted. All aforesaid forms may be permitted.
Article 5 [Legality examination of agreed forms] Where the award and remuneration for a service invention-creation is agreed upon by the entity and inventor through consultation, it shall be judged whether the agreement is valid or not, and whether it falls under any circumstance under which it shall be invalid, or may be revoked or modified in accordance with the provisions of the Contract Law and the Labor Contract Law.
If the award and remuneration for a service invention-creation are stipulated in the bylaws formulated in accordance with law, the legality of the procedures for formulating the bylaws shall be mainly examined.
If an agreement is reached between the entity and inventor through consultation, it shall be judged whether the agreement is valid or not and whether it falls under any circumstance under which it shall be invalid, or may be revoked or modified in accordance with the provisions of the Contract Law and the Labor Contract Law. In judging whether the agreement is valid or not, consideration shall be mainly given on whether the subjects have corresponding capacity for civil rights and capacity for civil conduct, whether the agreed contents are specific or not, and whether any compulsory provision of laws and administrative regulations is violated. The agreement may be revoked or modified if it is concluded due to major misunderstanding, is obviously unfair, or is concluded against the will of one party under the circumstance that one party employs the means of deception or coercion or takes advantage of the other party's difficulties.
If the award and remuneration for a service invention-creation are stipulated in the bylaws formulated in accordance with law, the legality of the procedures for formulating the bylaws shall be mainly examined, and the examination shall be conducted mainly based on relevant clauses of the Company Law and the Labor Contract Law.
Article 6 [Reasonableness examination of agreed contents] Under normal circumstances, the agreement of an enterprise on the standards of awards and remunerations for service invention-creations based on its nature, such as industrial research and development features, objective of filing the patent application, patent exploitation features and other factors shall be presumed to be reasonable.
If it is obviously unreasonable because the agreed amount of award and remuneration is extremely low, reasonable award and remuneration shall be determined based on the specific case circumstances.
There may be great differences in different industries, and the remunerations for service invention-creations in different industries cannot be exactly the same. Even in the same industry, the circumstances of each enterprise and entity are different, and their modes of business operations are totally different sometimes, consequently, the same award and remuneration rules for service invention-creations cannot be required in the same industry. The enterprises' right to independent business operations as well as the autonomy of will of the parties shall be respected, and under normal circumstances, the corresponding award and remuneration rules for service invention-creations shall be reasonable as long as they are agreed upon under statutory procedures.
If it is obviously unreasonable because the agreed amount of award and remuneration is extremely low, then the award and remuneration cannot be determined based on the agreement. However, under such a circumstance, we hold that reasonable award and remuneration shall be determined based on the specific case circumstances, and the award and remuneration of statutory standards shall not directly apply. The statutory standards shall be inapplicable since an agreement has been reached, if the court holds that the agreed award and remuneration fail to satisfy the reasonableness requirements of Article 16 of the Patent Law, the court shall determine a reasonable award and remuneration standard based on the specific case circumstances.
Article 7 [Statutory standards] Where an entity which is granted a patent right fails to reach an agreement with the inventor or designer, and fails to stipulate in its legally formulated bylaws the form and amount of award and remuneration for a service invention, the award and remuneration to the inventor of the service invention shall be determined based on statutory standards.
Article 8 [Determination of statutory awards] In accordance with Article 77 of the Detailed Rules for the Implementation of the Patent Law, an entity which is granted a patent right shall, if it has not reached an agreement with the inventor or designer on or stipulated in its legally formulated bylaws the form and amount of awards as mentioned in Article 16 of the Patent Law, give the inventor or designer a monetary award within three months as of the announcement of the patent right. The amount of monetary award for an invention patent shall be no less than 3,000 yuan; and the amount of monetary award for a patent for utility model or design shall be no less than 1,000 yuan. If the amount of monetary award claimed by the inventor or designer is more than 3,000 yuan or 1,000 yuan, the excess shall not be supported.
Article 9 [Determination of statutory remunerations] In accordance with Article 78 of the Detailed Rules for the Implementation of the Patent Law, when an entity exploits the patent itself, the remuneration for a patent for invention or utility model shall be no less than 2% of the business profits from exploiting the corresponding patent; the remuneration for a patent for design shall be no less than 0.2% of the business profits from exploiting the corresponding patent; and if the entity licenses others to exploit the patent, the remuneration for the patent shall be no less than 10% of the royalties it has charged. Where the proportion of remuneration claimed by the inventor or designer is higher than the aforesaid minimum proportion, the excess shall not be supported.
In accordance with Article 77 of the Detailed Rules for the Implementation of the Patent Law, the amount of monetary award for an invention patent shall be no less than 3,000 yuan; and the amount of monetary award for a patent for utility model or design shall be no less than 1,000 yuan. When the inventor or designer brings a lawsuit to the court over the disputes arising from the amount of monetary award for a service invention-creation, if the statutory standards apply, and the amount of monetary award claimed by the inventor or designer for an invention patent is more than 3,000 yuan, or the amount of monetary award claimed for a patent for utility model or design is more than 1,000 yuan, the questions as to whether the claim of the inventor or designer should be supported by the court, and whether the amount of monetary award should be raised by the court on the basis of the minimum amount of monetary award prescribed by the Detailed Rules for the Implementation of the Patent Law arise. Likewise, in accordance with Article 78 of the Detailed Rules for the Implementation of the Patent Law, when an entity exploits the patent itself, the remuneration for a patent for invention or utility model shall be no less than 2% of the business profits from exploiting the corresponding patent; the remuneration for a patent for design shall be no less than 0.2% of the business profits from exploiting the corresponding patent; and if an entity licenses others to exploit the patent, the remuneration for the patent shall be no less than 10% of the royalties it has charged. If the proportion of remuneration claimed by the inventor or designer is higher than the minimum statutory standard, that is, if the proportion of remuneration claimed for a patent for invention or utility model is more than 2% of business profits, or the proportion of remuneration claimed for a patent for design is more than 0.2% of business profits, or the proportion of royalties is more than 10%, the questions as to whether the corresponding claims of the inventor or designer should be supported by the court, and whether the proportion may be raised by the court arise.
The answers to the aforesaid questions are negative. The minimum statutory standard is an obligation which must be fulfilled by the entity where the service invention-creation is completed, and it is not a statutory obligation to pay the award or remuneration above the minimum statutory standard. It is absolutely appropriate for an entity to agree through consultation with the inventor or designer on or stipulate in its bylaws the payment of award or remuneration above the minimum statutory standard based on its features and requirements, it is the entity's right to independent business operations, however, to pay the award or remuneration above the minimum statutory standard is the entity's right instead of an obligation. In particular, after the principle of giving priority to agreement is determined in the third revision of the Detailed Rules for the Implementation of the Patent Law, the nature of the minimum statutory standard should be understood as such. The agreed standard may be higher or lower than the minimum statutory standard; the minimum statutory standard shall directly apply if there is no agreement, and an agreement is required if the agreed standard is higher than the minimum statutory standard.
Article 10 [Determination of statutory remuneration at the time of transfer of the patent right] Where an entity which is granted a patent right fails to agree with the inventor or designer on and fails to stipulate in its legally formulated bylaws the form and amount of remuneration for the transfer of a service invention-creation, if the entity which is granted the patent right transfers patent technology to others within the term of validity of the patent, the entity shall determine the remuneration to the inventor or designer by reference to the patent license.
Transfer is one of the ways to dispose of the patent right and an important means for gaining profits from the patent. However, whether the inventor or designer shall obtain the remuneration for a service invention when a patent right is transferred is not prescribed in the Patent Law, and there are provisions on the remuneration to the inventor of a service invention at the time of transfer or capital contribution in other laws of China such as the Contract Law and the Law on Promoting the Transfer of Scientific and Technological Achievements. In consideration of the similarity between transfer and license, the remuneration for a service invention-creation when a patent is transferred shall be determined by reference to the rules of the Patent Law and the Detailed Rules for the Implementation of the Patent Law for determining the remuneration for a service invention-creation when a patent is licensed.
Article 11 [Commissioned development] The inventor or designer of a service invention-creation shall claim the payment of award or remuneration for a service invention-creation under the precondition that the inventor or designer is an employee of the entity where the patent right remains.
If no agreement is reached on the attribution of right to apply for a patent, the commissioned party shall have the right to apply for a patent. After the patent right is granted, the commissioned party, which is entitled to the right to the service invention-creation, has the obligation to pay award and remuneration to the inventor and designer of the service invention-creation; and the commissioning party is not entitled to the patent right, and is not involved in the payment of award and remuneration for the service invention-creation.
If it is agreed that the right to apply for a patent remains with the commissioning party, the commissioning party shall have the right to apply for a patent. After the patent right is granted, the commissioned party shall not be involved in the payment of award and remuneration for the service invention-creation since it is not entitled to the patent right; and although the commissioning party is entitled to the patent right, it is also not involved in the payment of award and remuneration for the service invention-creation since the inventor or designer is not its employee.
If it is agreed that the right to apply for a patent remains with both parties, after the patent right is granted, the commissioning party shall not be involved in the payment of award and remuneration for the service invention-creation; and the commissioned party, as the joint owner of the patent right, shall pay the remuneration for the service invention-creation based on the profits obtained from the patent.
In accordance with Article 15 of the Patent Law, the joint owners of a patent right may exploit the patent independently or license others to exploit the patent by means of ordinary license. In the case of licensing others to exploit the patent, royalties charged shall be distributed among the joint owners. If the commissioned party where the inventor or designer works obtains royalties from the commissioning party, which licenses others to exploit the patent, and the inventor or designer claims award and remuneration for the service invention-creation from such royalties, such a claim shall be permitted.
It is prescribed in Article 8 of the Patent Law that, for an invention-creation made by an entity or individual upon the commissioning of another entity or individual, the right to apply for a patent shall, unless it is otherwise agreed upon, remain with the entity or individual which made the invention-creation or with the entities or individuals which jointly made the invention. After the application is approved, the entity (or entities) or individual(s) that filed the application shall be the patentee. The attribution of the invention-creation completed in such a form is also prescribed in the Contract Law, it is prescribed in Article 339 that, unless otherwise agreed upon by the parties, the right to apply for a patent on the invention-creation resulting from a commissioned development belongs to the developer. Where the developer is granted a patent right, the commissioning party may exploit such patent free of charge. Where the developer is to transfer the right to apply for a patent on the invention-creation resulting from the commissioned development, the commissioning party shall have the right to priority in acquiring such right under the same conditions.
In accordance with the aforesaid provisions, in such type of invention, the attribution of right to apply for a patent shall be firstly determined based on the agreement reached between the commissioning party and the commissioned party; and if there is no agreement or it is not agreed upon in the agreement, the statutory rules shall apply, and the commissioned party that completes the invention shall have the right to apply for a patent.
A. If there is no agreement, the commissioned party shall have the right to apply for a patent, and then be granted the patent right. The commissioned party, which is entitled to the right to the service invention-creation, has the obligation to pay award and remuneration to the inventor or designer of the service invention-creation; and the commissioning party is not involved in the payment of award and remuneration for the service invention-creation since it is not entitled to the patent right.
B. If it is agreed that the right to apply for a patent remains with the commissioning party, the commissioning party shall be finally granted the patent right. The inventor or designer, as the employee of the commissioned party, has no right to claim from the commissioning party the award and remuneration for the service invention-creation, for the reason that the right to claim the award and remuneration for the service invention-creation is a subordinated right, and it exists under the precondition of the service invention-creation, that is, the right to the service invention-creation enjoyed by the entity where the inventor or designer works, and only the entity which is granted the patent right has the obligation to pay award and remuneration to the person that completes the service invention-creation. The commissioned party is not involved in the payment of award and remuneration for the service invention-creation since it is not entitled to the patent right; and the commissioning party is also not involved in the payment of award and remuneration for the service invention-creation since it does not have labor relations with the inventor or designer though it is entitled to the patent.
C. If it is agreed that the right to apply for a patent remains with both parties, both parties shall be jointly granted the patent right. The commissioning party is not involved in the payment of award and remuneration for the service invention-creation since it does not have labor relations with the inventor or designer though it is entitled to the patent right. The commissioned party, as the joint owner of the patent right, shall pay award and remuneration for the service invention-creation based on the profits obtained from the patent. In accordance with Article 15 of the Patent Law, the joint owners of a patent right may exploit the patent independently or license others to exploit the patent by means of ordinary license. In the case of licensing others to exploit the patent, royalties charged shall be distributed among the joint owners. If the commissioned party where the inventor or designer works obtains royalties from the commissioning party, which licenses others to exploit the patent, and the inventor or designer claims award and remuneration for the service invention-creation from the royalties, the claim shall be permitted.
Article 12 [Cooperative development] The inventor or designer of a service invention-creation shall claim the award and remuneration for the service invention-creation under the precondition that the inventor or designer is an employee of the entity where the patent right remains.
If there is no agreement on the attribution of right to apply for a patent or it is agreed that the right to apply for a patent remains with all cooperative parties, after the patent right is granted, the inventor or designer cannot require other entities that jointly own the patent right to pay the award and remuneration for the service invention-creation to him or her.
In accordance with Article 15 of the Patent Law, the joint owners of a patent right may exploit the patent independently or license others to exploit the patent by means of ordinary license. In the case of licensing others to exploit the patent, royalties charged shall be distributed among the joint owners. If one joint owner of the patent right obtains the royalties by licensing others to exploit the patent, the royalties shall be firstly distributed among the joint owners of the patent, and each inventor or designer may claim the award and remuneration for the service invention-creation from the royalties distributed to the entity where he or she works.
If it is agreed that the right to apply for a patent remains with one party, the party which is entitled to the patent right shall have the obligation to pay award and remuneration for the service invention-creation to the inventor or designer, who is its employee, but it shall not have the obligation to pay award and remuneration for the service invention-creation to the inventor or designer, who is not its employee.
It is prescribed in Article 8 of the Patent Law that, for an invention-creation made through the joint work of two or more entities or individuals, the right to apply for a patent shall, unless it is otherwise agreed upon, remain with the entities or individuals that made or jointly made the invention. After the application is approved, the entity (or entities) or individual(s) that filed the application shall be the patentee.
A. If there is no agreement, or it is agreed that the invention-creation completed through cooperative development shall be owned by all cooperative parties, does the individual completing the invention-creation of a joint owner of the patent right has the right to obtain remuneration from the patent exploitation as a part of the entity where he or she works, or as a whole independently? Some opinion holds that any party of the joint owner that exploits the patent shall pay remuneration to all individuals who complete the service invention-creation instead of its employee, or pay comparative compensation to the individual of the other party who completes the service invention-creation when paying remuneration to its employee. Our opinion holds that the award and remuneration for a service invention-creation shall be paid under the precondition that the entity where the inventor or designer works obtains profits from the service invention-creation, the inventor or designer cannot require any other entity that jointly owns the patent right to pay the award and remuneration for the service invention-creation to him or her. In accordance with Article 15 of the Patent Law, the joint owners of a patent right may exploit the patent independently or license others to exploit the patent by means of ordinary license. In the case of licensing others to exploit the patent, royalties charged shall be distributed among the joint owners. If one joint owner of the patent right obtains the royalties by licensing others to exploit the patent, the royalties shall be firstly distributed among the joint owners of the patent right, and each inventor or designer may claim the award and remuneration for the service invention-creation from the royalties distributed to the entity where he or she works.
B. If it is agreed that the right remains with one party, the party that is entitled to the patent right shall have the obligation to pay the award and remuneration for the service invention-creation to the inventor or designer of the entity where he or she works, but it does not have the obligation to pay the award and remuneration for the service invention-creation to the inventor or designer who is not its employee.
Article 13 [Contract labor] The contract labor is the employee of the employer, and as the inventor or designer of a service invention-creation, he or she may claim award and remuneration for the service invention-creation completed in the employer.
Article 14 [Statute of limitations] The provisions on the two years' statute of limitations shall apply to the disputes over the award or remuneration to the inventor or designer of a service invention-creation; and the statute of limitations shall be calculated from the day when the party knows or should have known the infringement upon rights.
The disputes over the claim for the award or remuneration for a service invention-creation are not the disputes to which the special statute of limitations applies in accordance with legal provisions, and they are also different from labor disputes, so the two years' statute of limitations shall apply, and the statute of limitations shall be calculated from the day when the party knows or should have known the infringement upon rights in accordance with general provisions, and whether the labor relations are terminated or not at this time shall not be taken into consideration.
Article 15 [Reasonable expenses] Where the party claims reasonable expenses in a case on the disputes over the award or remuneration for a service invention-creation, the people's court shall not support such a claim.
The right to claim award or remuneration for a service invention-creation, as the right to claim remuneration, is different from the disputes over the patent infringement in nature, so it lacks legal basis to support the claim for reasonable expenses in such type of lawsuits.
Article 16 [Jurisdiction] The disputes over the award or remuneration to the inventor or designer of a service invention-creation are disputes over patent, and shall be under the jurisdiction of the people's court having jurisdiction over patent disputes.
It is specified in the Several Provisions of the Supreme People's Court on Issues concerning the Application of Law in the Trial of Cases on Patent Disputes that the cases on patent disputes accepted by people's courts include the cases on disputes over the award and remuneration to the inventor or designer of a service invention-creation, and such cases shall be subject to centralized jurisdiction. The disputes over the award and remuneration to the inventor or designer of a service invention-creation are also classified into disputes over the attribution of or infringement upon patent right in the Provisions on Civil Causes of Action in 2011. As a result, such type of cases shall be under the jurisdiction of the people's courts having jurisdiction over patent disputes.