Received Bonus and Stock Options
are Recognized as Inventor’s Remuneration
According to Article 7 of the Patent Act, the employer is vested with the owner of service invention. While the employer possesses the right to apply for a patent over the invention made by an employee during the course of employment performing their duty, the employer shall reasonably remunerate the inventor employee. However, if there is an effective agreement other than the default rules arranging the ownership of right and how an inventor may receive invention rewards, the agreement prevails. The goal of the policy is to create more economic incentives in addition to their regularly wages and to trigger innovative productivity.
In practice, when the employer implements a series of unilateral and yet internal guidance of working rules that govern invention remuneration, the said rules shall remain effective so long as the rewards bounded by the statutory framework are reasonable. Furthermore, it is upon the discretion of the court to determine, after weighing available factors, if the remuneration to pay is reasonable in terms of the amount and method, the procedure, and timing. Given with the interpretation of the legislative intent, parties cannot exclude employees from requesting inventor remuneration by a mutual agreement; however, an internal working guidance regarding inventor’s incentive is null and void if found against the law.
The IP Court released a judgment related to the issue of inventor remuneration on June 18, 2019. In view of the case, Yang was employed in a company manufacturing optoelectronic materials and components, which was later acquired by Epistar Corp. The acquired company used to implement an internal incentive rule for rewarding innovation (“Rule”). As the Rule applies, the rewards are issued in two installments: one at the time when the patent is filed, and the other when the patent is granted. Only the inventor employee who remains on service will be rewarded as required by the Rule. When Yang was still with the company, he had received the first installment of the reward for the patent as filed for his innovation. However, he left the company before the patent grant. Yang sued Epistar Corp. later on with the intent to claim for the second installment of the invention remuneration, along with the revenue obtained from some LED products allegedly made due to his contribution. Yang argued the on-the-job restriction is an unjustifiable hindrance towards employees to their entitlement to claim for patent remuneration. Also, Yang asserted that since patent remuneration is not a salary received from employment duty, his entitlement is, therefore, enforceable within the statutory limitation of 15 years, starting from the point when the patent is granted.
During the deliberation by the IP Court, it found a specific agreement reached between the acquired company and Yang that dictated invention remuneration. In addition, the Court also found that when Yang was working in the acquired company as a R&D engineer he had accepted and acknowledged the terms and conditions stipulated in the Rule. As such, Yang’s acceptance was an agreement, and in pursuant to Article 7 (1) of the Patent Act the said agreement should prevail. Since Yang had already received a patent application reward, he was no more entitled to any patent-grant rewards after his leave.
The Court particularly clarified the difference between “worker’s minimum wages” enforced in the Labor Law and the invention remuneration stipulated in the Patent Act as a response to Yang’s assertion that Epistar Corp. infringed his fundamental labor right. Basically, the Labor Law is aimed to protect employees as it requires employers to offer minimum working conditions such as maximum overtime, rest hours, and workplace injury insurance. Thus, the employers may base on different working conditions to tailor their labor conditions with respect to the specific business operation of the enterprise. As viewed, the Rule is exactly the kind of special deal preferable than the minimum labor treatment. Hence, it does not in whatsoever measure found to be in violation of the Labor Law.
Most noticeably, the IP Court determined that, first of all, given the existence of the “agreement (the Rule)” about the invention remuneration between Yang and the acquired company, Yang had already been “reasonably” remunerated. Second, the Court adjudicated that LED product at issue does not fall into the scope of claim of the patent at issue for which Yang claimed to have had contribution. As such, Yang’s claim that he should also be adequately compensated by the revenue generated from said LED products was not endorsed by the IP Court. Besides, Yang admitted to have received stock options in 2000 and 2001 respectively. On the other hand, Yang had been successfully promoted from a non-managerial R&D Engineer at entry all the way to a supervisory director of the R & D Division before his leave, while his salary had also been raised during the time of his service. All these merits and increase of interests were provided in commensurable to Yang on the basis of his “performance,” indicating that Yang’s contribution of innovation was already well evaluated by these extra cash rewards, stock options, promotions, and salary raise. Therefore, the IP Court concluded that Yang had been reasonably remunerated.
The IP Court ruled that the plaintiff Yang failed to present a valid ground to entitle for a reward according to Article 7(1) of the Patent Act. As such, Yang’s claim was, therefore, dismissed.
In view of the fact that this is a rare case in which the court considers the rewards the employee received previously are reckoned to be of adequate inventor remuneration. Nonetheless, the plaintiff may still appeal, whereas the IP community will stay aware of further development of the case.
for any questions relating to this topic, please contact us at cjchen@tsailee.com.tw |