Shanghai Court Promulgated New Rules on Service Invention Remuneration and Reward

(By Albert Chen)  Recently, the Shanghai Higher People’s Court (the “Higher Court”) issued the Guidelines on the Trial of Employment Remuneration and Reward for the Inventor and Designer (the “Guidelines”), which has further provided the issues involving the standard of the remuneration and reward as well as their payment. In today’s post, the author would like to interpret the new regulations in the Guidelines.

I. The standard of the service invention remuneration

According to the Guidelines, the remuneration for the service invention shall not be less than RMB 3,000 and not less than RMB 1,000 for  design patent and utility model.

In the Guidelines , the Higher Court made no break through on the amount of the remuneration, and still insists the minimum  remuneration shall be no less than RMB 3,000 for the invention or RMB 1,000 for the utility model or design patent. But it shall also be noted that, if the inventor or the designer claims a superior remuneration, while there is no specific regulation concerning the detailed amount, then the court shall not support such claims. According to the Higher Court, a judicial decision can only impose to pay the employee the minimum remuneration but no more.

As understood by the author, the Higher Court’s new regulation may encourage  to deliberately delay the payment of the remuneration or the reward, for the only consequence foreseeable is the payment of the minimum amount provided in the law.

II. The standard of the employment reward

Concerning the reward of the service invention, the original clauses as provided in the Rules remain unchanged. We have seen that the new regulation says that any amount claimed by the inventor or the designer above the statutory standard, while no agreement has been concluded between the parties, shall not be supported by the court (according to the regulation in the Rules, the reward for the implementing of the invention, shall no less than 2% of the annual profits, and 0.2% of the implementing of the patented design or the utility).

For the patent transfer by the unit, the Guidelines made complementary regulation to the Rules. The Rules only provides that for any licensing of the patent, the unit namely the licensor shall pay the inventor or the designer no less than 10% of the license fee collected. On the other hand, there is no regulation concerning the remuneration or reward concerning the patent transfer. Therefore, in the Guidelines herein issued, for any patent transfer by the unit, the inventor or the designer the reward should be paid according to the standard for the patent licensing. Even so, the standard hereby is still less than  the 30% or 50% regulated in the Measures.

III. Are the remuneration or reward owed in case of entrusted or cooperated development?

The Guidelines also specifies that in the case of entrusted or cooperated development, when the patent is finally granted to the unit as per agreement or legal regulations, the unit has no obligation to pay the individual any remuneration or reward because the precondition of that payment is the employment relationship between the unit and the individual. There is no such relationship in the case of the entrusted or cooperated development,  for this reason the unit does not have to pay the individual any remuneration or reward.

For the situation when the individual finally gets the patent developed from the entrustment or the cooperation as agreed by the parties or under the regulation in the law. The unit also hasthe full option on the exercising of the patent, and there is no need to compensate them.

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