1. What is a service invention?
Under Article 6 of the Patent Law of the People’s Republic of China, an invention-creation made in the course of performing an entity’s tasks, or mainly by using that entity’s material and technical resources, is a service invention-creation. “Invention-creation” includes inventions, utility models and designs. The right to apply for a patent for a service invention belongs to the entity. Once the patent is granted, the entity becomes the patentee.
For an invention-creation made using an entity’s material and technical resources, an agreement between the entity and the inventor or designer governing ownership of the right to apply for a patent or of the patent right takes precedence. In this article, “inventor” also includes a designer.
A service invention made in the course of performing an entity’s tasks includes an invention made:
(1) in the course of performing the inventor’s own duties;
(2) while carrying out another task assigned by the entity; or
(3) within one year after retirement, resignation or termination of the employment or personnel relationship, where the invention relates to the inventor’s former duties or another task assigned by the former entity.
The entity may be a legal person or an unincorporated organisation and may include a temporary employer. Its material and technical resources include funds, equipment, components, raw materials and technical information that is not available to the public.
2. Rewards and remuneration for service inventions
Under Article 16 of the Patent Law, an entity granted a patent must reward the inventor of the service invention. Once the patent is exploited, the inventor must receive reasonable remuneration reflecting the scope of its application and the economic benefits obtained.
An agreement between the entity and the inventor takes precedence in determining the form and amount of rewards and remuneration. These may include money, shares, promotion or a salary increase.
If there is no agreement, or the agreement is manifestly unreasonable, the following statutory standards apply.
Statutory standards for rewards
The entity must pay the inventor a monetary reward within three months after the patent grant is announced. The minimum reward is RMB 3,000 (approximately USD 470) for an invention patent and RMB 1,000 (approximately USD 160) for a utility model or design patent.
Where the invention results from a proposal made by the inventor and adopted by the entity, the entity must grant a reward on favourable terms.
Statutory standards for remuneration
During the patent term, after the patented invention-creation is exploited, the entity must pay the inventor annual remuneration of at least 2% of the operating profits from an invention or utility model patent, or at least 0.2% of the operating profits from a design patent.
Alternatively, the entity may pay a lump sum calculated by reference to these percentages. Where the entity licenses another entity or individual to exploit the patent, at least 10% of the licence fees received must be paid to the inventor as remuneration.
Disputes over patent ownership or inventors’ rewards and remuneration may be resolved through negotiation, administrative mediation by the patent authority, or litigation.
The statutory reward and remuneration provisions discussed above are Articles 77 and 78, respectively, of the Implementing Regulations of the Patent Law.
