4.5.2 Dispute cases over ownership of patent rights (patent application rights)
Dispute cases over the ownership of patent rights (patent application rights) primarily involve service invention-creations, invention-creations made through cooperative development or commissioned development, and the misappropriation of technical secrets.
4.5.2.1 Service invention-creations
Article 6 of the Patent Law stipulates the following:
An invention-creation that is accomplished in the course of performing the duties of the employee, or mainly by using the material and technological conditions of an employer, is a service invention-creation. For a service invention-creation, the right to apply for a patent belongs to the employer. After the application is approved, the employer shall be the patentee. The employer may, in accordance with the law, dispose of the right to apply for a patent for its service invention-creation and the patent right, there facilitating the exploitation and utilization of relevant invention-creation.
For a non-service invention-creation, the right to apply for a patent belongs to the inventor or designer. After the application is approved, the inventor or designer shall be the patentee.
For service invention-creations, Article 847 paragraph 2 of the Civil Code also stipulates the following: “A work for hire is a technological achievement that is accomplished as a result of performing the tasks assigned by a legal person or unincorporated organization or that is accomplished mainly by using the material and technical conditions of a legal person or unincorporated organization.” It should be noted that the “work for hire” stipulated in this article has a broader meaning than the “service invention-creations” stipulated in Article 6 of the Patent Law: the former includes not only patent rights or patent application rights but also other types of intellectual property rights, like new plant varieties, computer software copyright and so on.
4.5.2.1.1 Invention-creations accomplished in the course of performing the duties of an employee
Article 12 paragraph 1 of the Rules for the Implementation of the Patent Law stipulates the following:
Invention-creations accomplished while performing the tasks assigned by employer referred to in Article 6 of the Patent Law means any invention-creation made:
- (1) in the course of performing an employee’s own duty;
- (2) in execution of any task, other than his own duty, which was entrusted to him by the employer; or
- (3) within one year from his retirement, resignation or from termination of his employment or personnel relationship with the entity to which he previously belongs, where the invention-creation relates to his own duty or any other task entrusted to him by the entity to which he was previously employed.
With respect to “a technological achievement that is accomplished as a result of performing the tasks assigned by a legal person or unincorporated organization,” as mentioned in Article 847 paragraph 2 of the Civil Code, Article 2 of the Interpretation of Technology Contracts112 stipulates the following two circumstances:
- (1) performing the employee’s own duty or undertaking other technical development tasks assigned thereby;
- (2) continuing to perform technical development work that is related to the employee’s own duty or tasks assigned by the former employer within one year after separation, unless otherwise provided for by laws or administrative regulations.
Compared with Article 12(3) of the Rules for the Implementation of the Patent Law, the second item in the above provision contains the additional phrase “unless otherwise provided for by laws or administrative regulations.”
4.5.2.1.2 Invention-creations made mainly by using the material and technical conditions of an employer
Article 6 paragraph 3 of the Patent Law states the following:
For an invention-creation that is accomplished by using the material and technical conditions of an employer, if the employer has concluded a contract with the inventor or designer providing the ownership of the right to apply for the patent or the ownership of the patent right, such provision shall prevail.
In practice, an invention-creation made by a former employee may involve performing the tasks assigned by a former employer but using the material and technical conditions of the current employer. According to Article 5 of the Interpretation of Technology Contracts, under such a circumstance, the rights and interests will be determined in accordance with an agreement reached between the former employer and the current employer. Otherwise, the rights and interests are shared between them based on their respective contributions to the technological achievement.
With respect to the phrase “material and technical conditions” in Article 6 of the Patent Law, Article 12 paragraph 2 of the Rules for the Implementation of the Patent Law stipulates that this means “the employer’s money, equipment, spare parts, raw materials or technical materials which are not available to the public, etc.” Article 3 of the Interpretation of Technology Contracts stipulates the following: “‘material and technical conditions’ as depicted in Article 847 paragraph 2 of the Civil Code include money, equipment, apparatuses, raw materials, undisclosed technical information and documents, etc.”
In a retrial of a dispute over patent ownership, Shenzhen Weibond Technology Co. v. Li Jianyi,113 the determination of “invention-creations related to” an employee’s own duty or any other task assigned to them by the former employer (as per Article 12(3) of the Rules for the Implementation of the Patent Law) was further clarified:
The interests of the employee, the former employer and the current employer shall be balanced and the following factors shall be comprehensively considered: first, the specific contents of the employee’s duty or task assigned to him; second, specific circumstances of the involved patent and its relation with the employee’s duty or task; third, whether the former employer has conducted technological development and research activities related to the involved patent or whether there is another legitimate source for the patented technology; fourth, whether the right holder or inventor of the involved patent (application) can make reasonable explanations on the development and research process or source of the patented technology.
4.5.2.1.3 Ownership and disposal of service invention-creations
According to Article 6 paragraph 1 of the Patent Law, “[f]or a service invention-creation, the right to apply for a patent belongs to the employer. After the application is approved, the employer shall be the patentee.” Article 2 paragraph 2 of the Interpretation of Technology Contracts stipulates the following: “Where a legal person or unincorporated organization has entered into an agreement with an employee, with respect to the rights and interests in and to a technological achievement accomplished by the employee when he or she was employed or after separation therefrom, the people’s courts shall consider the agreement.”
When the Patent Law was last amended in 2020, it was stipulated in Article 6 paragraph 1 that “[t]he employer may, in accordance with the law, dispose of the right to apply for a patent for its service invention-creation and the patent right, thereby facilitating the exploitation and utilization of the relevant invention-creation.” Article 847 paragraph 1 of the Civil Code stipulates the following:
Where a right to use or transfer a work for hire belongs to a legal person or unincorporated organization, the legal person or unincorporated organization may conclude a technology contract on the work for hire. Where the legal person or unincorporated organization concludes a technology contract to transfer the work for hire, the creator of the work for hire has right in priority to acquire it on equivalent conditions.
4.5.2.1.4 Remuneration, reward and authorship of the inventor or designer
Article 15 of the Patent Law stipulates the following: “The entity that is granted a patent right shall reward the inventor or designer of service invention-creation. After such patent is exploited, the entity shall pay the inventor or designer a reasonable remuneration based on the extent of spreading and application as well as the economic benefits yielded.” Articles 76–78 of the Rules for the Implementation of the Patent Law further provide for the methods and amounts of “reward and remuneration.”
According to Article 16 of the Patent Law, an inventor or designer has the right to name themselves as such in the patent documents. Article 849 of the Civil Code also stipulates the following: “An individual person who has accomplished a technological work product has the right to indicate on the relevant documents that the said person is the creator thereof and to receive certificate of honor and rewards.”
With respect to the identification of an inventor or designer, further provisions are made in Article 13 of the Rules for the Implementation of the Patent Law and Article 6 of the Interpretation of Technology Contracts.
4.5.2.2 Invention-creations made through cooperative or commissioned development
According to Article 8 of the Patent Law, for an invention-creation accomplished by two or more entities or individuals, or accomplished by an entity or individual in the execution of a commission given to them by another entity or individual, the right to apply for a patent belongs, unless otherwise agreed upon, to the entity or individual that accomplished the invention-creation, or to the entities or individuals that accomplished the invention-creation in collaboration. After the patent application is approved, the entity (or entities) or individual (or individuals) that filed the application shall be the patentee. Articles 859 and 860 of the Civil Code also provide for invention-creations accomplished through commissioned development and cooperative development, respectively.
4.5.2.3 Patent applications based on unauthorized use of others’ technical secrets
If an infringer, without the authorization of the right holder, applies for a patent for a technical secret – whether obtained legitimately from the right holder thereof or illegally through theft or other undue means – the right holder may file a civil lawsuit against trade secret misappropriation in accordance with the laws to request a judgment ordering that the infringer assume civil liabilities (e.g., cessation of misappropriation and compensation for losses) or to request the competent people’s court to declare that the right holder has the patent right over the patent unilaterally applied for by the infringer.
In an appeal of a dispute over patent ownership, Tianjin Greenpine Pharma Co. v. Huabei Pharmaceutical Hebei Huamin Pharmaceutical Co.,114 the Supreme People’s Court held that, where a party asserts ownership of a patent right on the ground of misappropriation of a technical secret, the people’s court shall examine whether the technical secret is disclosed in the patent documents and whether it is incorporated into the patented technical solution. If the answer to either question is in the affirmative, then the technical secret has been misappropriated. If the technical secret constitutes the substantial content of the patented technical solution, the right holder of the technical secret has lawful rights to the patent.