Shanghai Releases Guideline for Handling Disputes Over Service Inventions

July 16, 2013 Posted by China Briefing Reading Time: 3 minutes

Jul. 16 – Shanghai Higher People’s Court released the “Guideline for Handling Disputes over Rewards and Remunerations for Inventors or Designers of Service Inventions (hereinafter referred to as ‘Guideline’)” on June 25, which expressly provides that the standard of rewards and remunerations for service inventions can be agreed between the entity and the inventors or designers through consultation. Detailed information can be found below.

“Giving Priority to Agreements” Principle
The Guideline restates the “giving priority to agreements” principle stipulated under the Implementing Rules of Patent Law, providing that an entity which has been granted the patent rights may agree with the inventors or designers on the rewards and remunerations for the service inventions.

Moreover, where an agreement has been reached between both of the parties, the rewards and remunerations for the service inventions shall be determined according to such agreement. In the absence of any agreement, the rewards and remunerations shall be determined according to statutory standards.

Statutory Standards
According to the Guideline, where an entity has neither agreed with the inventors or designers of the service inventions on the form and amount of the rewards, nor has prescribed such under its rules, the entity shall give a monetary reward to the relevant inventors or designers within three months upon the announcement of the patent rights. Specifically:

The monetary reward for one invention patent shall be no less than RMB 3,000; and
The monetary reward for one utility model patent or design patent shall be no less than RMB1,000.

Moreover, if an inventor or designer claims a monetary reward exceeding RMB 3,000 or RMB1,000, the excessive amount shall not be upheld by the relevant people’s court.

Rewards and Remunerations
An entity being granted the patent rights may agree with the inventors or designers on the form and amount of rewards and remunerations for the service inventions.

Under the “giving priority to agreements” principle, rewards and remunerations may be given under various forms. In addition to the monetary form, rewards and remunerations may also be given in the following forms:

Stocks
Stock options
Promotion
Salary increase
Paid leave

Legal Review of the Agreement
Under the Guideline, where the rewards and remunerations for service inventions are agreed upon through consultation between an entity and the inventors, the relevant people’s court shall judge the effectiveness of such agreements based on the Contract Law and the Labor Contract Law. Specifically:

When judging whether such agreements are effective or not, the people’s court shall mainly take the following factors into consideration:

Whether the parties involved have the corresponding capacity for civil rights and civil conducts;
Whether the contents of such agreements are specific and clear enough; and
Whether such agreements are in violation of the mandatory provisions of laws and administrative regulations.

When judging whether such agreements are voidable or modifiable, the people’s court shall mainly consider the following factors:

Whether the agreements are reached under major misunderstanding;
Whether the agreements are obviously unfair; and
Whether the agreements are reached against the true will of one party.

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