TIPS^®  Taiwan Intellectual Property Special

China Updates

Former Employee Granted Patent Rights for Application Filed One Month After Resignation

In China, it is widely understood in practice that the patent right filed by an ex-employee within a year after he or she left the original entity, shall still be considered as “service invention-creation,’ and therefore belongs to the entity to which he or she previously worked for. This understanding is further supported by Article 6 of the Patent Law, and Rule 11 of the Implementing Regulations of the Patent Law (see below). However, it is now being challenged by a recent ruling made by Guangdong Supreme Court.

A high-tech plastic materials manufacturing company in Guangdong province filed a law-suit against its former employee, Mr. Chen, after realizing that Mr. Chen, a former sales employee of the company for six years, had been granted a utility model patent right related to the core technology of the company. The said utility model patent right, entitled “An Apparatus for the Printing and Transmission of an Automatic Printer,” with Mr. Chen being both the inventor and the patentee, was filed within one month after his resignation from the Guangdong company. The Intermediate Court first concluded that since the invention-creation was invented within one year from Mr. Chen’s resignation, and Mr. Chen’s previous employment as a sales representative with the company gave him the opportunity to obtain the knowledge, technique, experience and information, including confidential and non-disclosed information of the patented technology, the ownership of the utility model patent should belong to the Guangdong company.

Up until this stage, the decision was in conformity with historical understanding of service invention-creation ownership. However, the final decision made by the Supreme Court after Mr. Chen’s appeal was controversial. In the Supreme Court, the collegiate bench considered that only if the patent right in dispute fulfilled one of the following two requirements, should the right be deemed as service invention-creation: 1) [any invention-creation made] within one year from his resignation, retirement or change of work, where the invention-creation relates to his own duty or the other task entrusted to him by the entity to which he previously belonged; 2) [any invention-creation made using] the entity's money, equipment, spare parts, raw materials or technical materials which are not disclosed to the public.

The final ruling overruled the decision made by the Intermediate Court based on the interpretation that since Mr. Chen was only involved in sales-related duties and the company could not provide sufficient evidence of his involvement in any R&D duties, or that the invention-creation was made using the company’s money, equipment, spare parts, raw materials or other physical conditions, the invention-creation filed by Mr. Chen did not belong to service invention-creation. The Supreme Court further stated that in order to protect the rights of the labor, unless otherwise stated in the law, regulations, or contracts, no entity shall have the rights to restrict or constrain a former employee from utilizing the skills obtained during his or her employment. Mr. Chen using the skills obtained during his employment with the Guangdong company in developing his own invention-creation is therefore natural and reasonable.