New Draft of Service Inventor Remuneration Regulations Open for Public Comment

On November 12, 2012,  SIPO made publicly available a  draft of the proposed Service Invention Remuneration Regulations (职务发明条例草案(征求意见稿).  Comments are due at SIPO by December 3.  An earlier draft reportedly contained numerous problematic provisions for foreign investors, including in areas regarding mandatory ownership and compensation, as well as extending reach beyond patents into software copyright and other areas.  The draft and an explanation of the draft are available at http://www.sipo.gov.cn/tz/gz/201211/t20121112_769843.html.

Here is an unofficial English translation of the draft:

Draft Regulations on Service Invention

(For soliciting public opinion)

Chapter 1 General Provisions

Article 1

The Regulations are formulated for the purpose of protecting the legal rights and interests of the inventor of service invention and the entity, fully mobilizing the enthusiasm of the inventor of service invention and the entity, improving the ability to innovate, promoting the application and implementation of the service invention and its intellectual property right, promoting the economic and social development and constructing an innovative and talents-powerful country.

Article 2

The State encourages service invention and the creation, implementation, protection and management of its intellectual property right.

The people’s governments at all levels and their related administrative authorities in charge shall actively take effective measures to increase the intensity of promotion and popularization of the service invention system, strengthen the guidance and assistance to entities and inventors in implementing the Regulations, support and promote application and implementation of service invention and its intellectual property right.

Article 3

The patent administration department under the State Council, the agriculture administration department, the forestry administration department (hereinafter generally referred to as “Administrative Departments for IP Affaires”), the science and technology administration department and the labor administration department are responsible for supervision and administration of country wide service invention system in accordance with division of their respective responsibilities.

Administrative department for IP affairs, science and technology administration departments and labor administration departments at the local people’s government at or above the county level are responsible for, according to the division of their respective responsibilities, supervision and administration of service-invention systems of respective administrative regions.

Article 4:

In the Regulations, “invention” refers to the achievement of mental-creation, which is made within the territory of People’s Republic of China and is eligible subject matter of patent right, right of new varieties of plants, exclusive right of layout-design, or know-how.

Article 5

“Inventor” as mentioned in the Regulations means any person who makes creative contributions to the substantive features of an invention.

Any person who, during the course of accomplishing the invention, is responsible only for organizational work, or who only offers facilities for making use of material and technical means, or who takes part in other auxiliary functions, shall not be considered as an inventor.

Article 6

The state encourages the entity which engages in research and development to establish the intellectual property management system for service invention and set up specialized department or designate specialized staff responsible for the IP management, or commission a professional gency to manage IP related affairs on behalf of the entity.

Entity engaging in research and development shall establish the invention reporting system, or reach agreement with inventors, clearly define the entity and the inventor’s rights, obligations and responsibilities upon completion of an invention, and timely determine the ownership of the rights and interests relating to the invention.

Entity engaging in research and development shall establish award and remuneration system for service invention or reach agreement with inventors on the award and remuneration.

When an entity establishes the above systems, it shall listen to and consider the opinions and suggestions of relevant persons, and disclose the invention reporting system and the award and remuneration system to research staff and other relevant persons.

Chapter 2 Ownership of Invention

Article 7:

The following inventions belong to service invention:

1, the invention made in execution of the duties assigned by the entity to which he belongs;

2, the invention made in execution of any task, other than his own duty, which was assigned to him by the entity to which he belongs;

3, the invention made within one year from his retirement, resignation or from termination of his employment or human resources relationship with the entity to which he previously belonged, where the invention relates to his own duty or the other task assigned to him by the entity to which he previously belonged, but except new varieties of plans which are subject to other provisions made by the state;

4, the invention made mainly by using the money, equipment, spare parts, raw material or technical materials which are not disclosed to the public of the entity he belongs to; but except there is an agreement on returning funding or fees for the usage to the entity to which he belongs, or using the material technical means of the entity to which he belongs merely for verification or testing upon completion.

Article 8:

For the service invention, entity is entitled to the right of applying for intellectual property right, protecting as know-how or publish and the inventor is entitled to the right of inventorship and the right of getting the award and remuneration.

For a non service invention, inventor is entitled to the right of inventorship, the right of applying for intellectual property right, or protecting as know-how or publish.

Article 9:

The entity may enter into an agreement with the inventor on the right regarding the invention which is relevant to the business of the entity, such as the right of application for intellectual property right, or protecting as technique secret, or making public. The provisions in this Chapter of the Regulations shall apply in the absence of the above mentioned agreement.

Chapter 3 Report of Invention and Application for Intellectual Property Right

Article 10:

Where the inventor makes an invention relevant to the business of the entity to which he belongs, he shall, except there is an agreement or other provisions made by the entity otherwise, report the invention to the entity within two months from the date the invention is completed.

Where the invention is made by two or more inventors, the report shall be made by the inventors jointly.

Article 11:

An invention report shall specify below details:

1, the name of the inventor;

2, the title and content of the invention;

3, whether the invention is a service invention or a non service invention and the reason thereof;

4, the other matters which the inventor considers should be stated.

Article 12:

Where an inventor claims the invention he reports is a non service invention, the entity shall, within two months from the receipt of the report which is in conformity with Article 11, give a written reply; failure of giving such a reply within the above mentioned time period is deemed as entity’s acceptance that the invention is a non service invention.

Article 13:

Where the entity claims the reported non service invention to be a service invention in the written reply, it shall state the grounds.

Where the inventor presents a written counterclaim within two months from the receipt of the reply from the entity, the parties involved may resolve the dispute in accordance with Article 42 of the Regulations; where no counterclaim is presented, the inventor is deemed as in agreement that the invention is a service invention.

Article 14

The entity shall, within 6 months from the service invention reporting date, decide whether to apply for intellectual property right, protect as know-how or publish and shall inform the inventor of the decision in a written notice.

Where the entity fails to inform the inventor within the time limit as provided in the above paragraph, the inventor may send a written inquiry urging the entity to reply; if the entity fails to reply after 1 month of the inventor’s written inquiry, the invention shall be deemed to be protected as know-how by the entity, and the inventor has the right to have the compensation as provided in Article 25. If the entity afterwards applies and obtains domestic intellectual property right of this invention, the inventor is entitled to get award and remuneration as provided in the Regulations.

Article 15:

Where the entity applies for intellectual property right of the service invention, it may, for the application documents intend to be filed, seek the opinion from the inventor. The inventor shall actively cooperate with the entity for the application for intellectual property right.

During the application process for intellectual property right, the inventor is entitled to request information on the progress from the entity.

Article 16:

Where the entity intends to stop the process of applying for intellectual property right or abandon the intellectual property right of a service invention, it shall inform the inventor 1 month in advance. The inventor may negotiate with the entity to get the application right to intellectual property right or intellectual property right for a fee or free of charge. The entity shall assist the inventor actively to complete the assignment formalities. If the parties fail to reach an agreement, they may solve the disputes in accordance with the Article 42 of the Regulations.

Where the inventor obtains the relevant right in accordance with the above paragraph free of charge, the entity is entitled to implement the service invention or its intellectual property right free of charge.

Article 17:

The inventor has the confidentiality obligation on service invention he made, and shall not disclose it to public without the authorization of the entity, or apply for intellectual property right or assign to any third party on his own.

The entity has the confidentiality obligation for the non service invention disclosed thereto, and shall not disclose it to public without the authorization of the inventor, or apply for intellectual property right or assign to any third party on it own.

Chapter 4 Award and Remuneration of Service Invention

Article 18:

Where the entity is granted the intellectual property right of a service invention, it shall grant award to the inventor in a timely manner.

Where the entity assigns, license others to exploit, or exploits on its own the service invention which is granted the intellectual property right, it shall pay the inventor an reasonable remuneration in time based on the economic benefits yielded and the level of contribution made by the inventor.

Article 19:

The entity may enters into an agreement with the inventor, or provide it in its policy formulated in accordance with the laws, on the procedure, manner and amount of the award and remuneration. The agreement or policy shall inform the inventor the right he is entitled to, the way to seek relief, and in accordance with Articles 20 and 23 of the Regulations.

Any agreement or policy eliminating or limiting the right which the inventor is entitled with in accordance with the Regulations are invalid.

Article 20:

When the entity decides the procedure, manner and amount of the award and remuneration given to the inventor, it shall listen to the opinions of inventors.

The entity shall, inform the inventor of the information on the economic benefit earned by the entity by exploiting, assigning, licensing of service invention.

Article 21:

Where the entity has not entered into an agreement with the inventor on the award to the service invention, and has not provided the award to the service invention in its policy formulated, it shall, for the service invention granted an patent right or the right of new varieties of plants, award all of the inventors a sum of money as prize which shall not be less than 200% of the monthly average wages of the workers in the entity; and for the service invention granted other intellectual property rights, award to all of the inventors a sum of money as prize which shall not be less than the monthly average wages of the workers in the entity.

Article 22

Where the entity has not entered into an agreement with the inventor on the remuneration and has not provided the remuneration in its rules and Regulations, it shall, upon the exploitation of the intellectual property rights, provides the remuneration to all related inventors by one of the following ways:

1, within the valid term of the intellectual property, extract a sum of money which shall be no less than 5% from the operating profit of exploiting the patent right or the right of new varieties of plants, or no less than 3% from the operating profit of exploiting the other intellectual property right;

2, within the valid term of the intellectual property, extract a sum of money which shall be no less than 0.5% from the revenue of exploiting the patent right or the right of new varieties of plants, or no less than 0.3% from the revenue of exploiting the other intellectual property right;

3, within the valid term of the intellectual property, references the amount of the above two items, determine the amount of annual remuneration in accordance with the reasonable multiple of the personal salary of the inventor;

4, references the reasonable multiple of the amount of the above items 1 and 2, determine the lump sum amount of remuneration to be paid to the inventor.

The accumulated amount of the remuneration above will not be more then 50% of the accumulated operating profit of exploiting the intellectual property right.

Where the entity has not entered into an agreement with the inventor on the remuneration and has not provided the remuneration in its policy, it shall, upon the assignment, license to the third party of the intellectual property right, shall extract a sum of money which shall be no less than 20% from the net income of assignment or license as a remuneration to the inventor.

Article 23:

When deciding the amount of the remuneration, factors shall be considered such as the economic contribution to the entire product or process made by each service invention, and the contribution into each service invention made by every inventor, etc.

Article 24:

Where the entity has not entered into an agreement with the inventor on the time limit for paying award and remuneration, and has not provided the time limit for paying award and remuneration in its policy formulated in accordance with the laws, it shall, pay the money of prize within three months from the date of granting of the intellectual property right; where the intellectual property of a service invention is assigned or licensed to others, the entity shall pay the remuneration within three months upon the assignment or license fee is received; where the entity exploits the service invention on its own and pays the remuneration yearly in cash, it shall pay the remuneration within three months upon the expiration of each accounting year. Where the remuneration is paid in stock form, the entity shall pay dividend in accordance with laws and regulations and entity policy.

Article 25:

Where the entity decides to protect the service invention as know-how, it shall pay a reasonable compensation to the inventor in accordance with the provisions of this Chapter.

Article 26:

Where the employment or human resources relation between the inventor and the entity is terminated, the inventor shall fulfill the obligations for the invention completed before the termination and relevant with the business of the entity as provided in Article 10, 15, and 17 in the Regulations while the inventor shall remains entitled to the inventorship and to receive award and remuneration.

Where the inventor is deceased, his heir or devisee is entitled to enjoy the right of receiving award and remuneration.

Article 27:

Except there is an agreement between the entity and the inventor, or provisions in the entity policy which is formulated in accordance with the law, where the intellectual property right granted on service invention is announced to be invalided or revoked, it will not be retrospective to the award and remuneration which the inventor received.

Article 28:

The award and remuneration given to the inventor by enterprises shall be listed into cost of the enterprise. The award and remuneration given by other entities shall be categorized in accounting book as provided in relevant rules.

Chapter 5 Exploitation of Intellectual Property Right in Service Invention

Article 29:

Where an entity intends to assign intellectual property rights of a service invention, the inventor is entitled to the right of first refusal under the same conditions.

Article 30:

Where state-owned enterprises and institution, within 3 years from obtaining the intellectual property right on the service invention, neither exploit or have necessary preparation for implementing without any justifiable reasons, nor assign or license others to exploit, the inventor shall, under the situation that the ownership of the service invention is not changed, may implement or license others to exploit the intellectual property right and enjoy the relevant benefit in accordance with the agreement with the entity.

Article 31:

The State adopts a preferential tax policy, regarding the income obtaining from transformation and carrying out of the service invention and its intellectual property of the entity, and the award and remuneration awarded to the inventor; the concrete measures will be established by the financial department of the state council jointly with the tax authorities of the state council, the administrative department for science and technology of the state council, the competent departments of intellectual property of the state council.

Article 32:

Where the relevant competent departments of the state establishes the policies and measures following the standard of examination and evaluation of the technique or intellectual property of the entity, it shall, consider the implementation of the service invention made by the entity as the factor for examination or evaluation.

The situation of establishing and managing the service invention system of the state-owned enterprises and institutions shall be brought into the performance assessment considerations on its leaders.

Article 33:

The state will establish the fund to promote the implementation of the service invention made from the projects by using the science and under technology fund and science and technology plans which are established by the fiscal fund.

Chapter 6 Supervision, Inspection and Legal Responsibility

Article 34:

The supervisory management supervises and inspects the implementation of the service invention system made by the entity in accordance with the laws.

During the supervision and inspection, the supervisory management has the authority to examine the work contracts, entity policy, etc. relevant to the service invention, and inquire the parties involved. Both of the entity and the inventor shall provide the relevant materials and situation faithfully.

Article 35:

While the supervisory management doing its supervision and inspection, it shall produce documents of certification, conduct its duties in accordance with the laws, and be confidential to the business secrets which were informed of during the process of supervision and inspection. Where it is found in supervision and inspection that the entity does not follow the service invention system in accordance with the laws, the supervisory management may, order the entity to make corrections within a time limit; if the entity fails to do so, it shall be warned.

Article 36:

Where the inventor violates the provisions of the Regulations and applies intellectual property for the service invention, the right granted under the application will be entitled to the entity, and all of the benefits obtained by the inventor shall be returned to the entity. Where the entity violates the provisions of the Regulations and applies for intellectual property right for the non service invention, the right granted under the application will be entitled to the inventor, and all of the benefits obtained by the entity shall be returned to the inventor.

Article 37:

Below are deemed as infringement of right of inventorship:

1,fail to name the inventor as inventor

2, name the non inventor as an inventor.

Article 38:

Where the inventor claims that his authorship has been infringed, he may, request the administrative department of intellectual property right of the people’s government at the county level to handle it, or institute legal proceedings before the People’s Court.

Where the administrative department of intellectual property right of the people’s government at the county level or People’s Court finds the infringement of inventorship, the infringer will be ordered to stop the infringement, apology and compensate for loss. The authorities for granting or registering intellectual property right shall correct the inventorship recorded in the relevant documents and make an announcement based on the effective ruling.

Where infringement of inventorship of two or more inventors or infringement of inventorship for twice or more times is found, infringer shall be imposed on a penalty under 50,000 RMB and be announced for the infringement by the administrative department of intellectual property right f the people’s government at the county level.

Article 39:

Any organization or individual is entitled to report, complain the behavior of infringement over the right of authorship of the inventor to the administrative department of intellectual property right of the people’s government at or above the county level, and the department received the report or complaint shall investigate and handle it timely.

Article 40:

Where the entity policy or the agreement entered into with inventors is not in accordance with Article 19.1 of the Regulations, or considered to be invalid according to Article 19.2 of the Regulations, and a loss to the inventor is caused, the entity shall be liable for damages.

Article 41:

Where the entity fails to provide award and remuneration timely and in full amount to the inventor in accordance with the entity policy or the agreement, it shall be ordered to make a correction by the administrative department of intellectual property right of the people’s government at the county level; where a loss of the inventor is caused, the entity shall be liable for damages.

Article 42:

Where dispute is caused by the ownership of the right of the invention or the award and remuneration, it will be consulted and solved by concerned parties. If concerned parties fail to do so, they may request the mediation from the administrative department of intellectual property right of the people’s government at the county level, or may institute legal proceedings before the People’s Court, or request arbitration in accordance with the laws.

Article 43:

Upon the application for intellectual property of the invention, where the involved parties have dispute over the ownership of the invention, the department granting the intellectual property right may, based on the request of the concerned parties, discontinue the relevant process of the intellectual property right.

Upon the settlement of the dispute over the ownership, the concerned parties may, with the effective legal instruments, request for restoration of the relevant process of the intellectual property right.

Chapter 7 Supplementary Articles

Article 44

Where an entity makes an agreement with the inventor regarding the ownership of the invention or the award and remuneration, the entity may file the related contract and company policy for records with the local administrative department of the intellectual property right.

Article 45

The Regulations are applicable for the service works of computer software.

Article 46

The Regulations are effective from the date of .

5 thoughts on “New Draft of Service Inventor Remuneration Regulations Open for Public Comment

  1. chinaipr2 says:

    Here is a translation, provided by the Business Software Alliance, of the explanatory note to the Service Invention Regulation (draft for public comment):https://chinaipr2.files.wordpress.com/2012/11/revised-sipo-draft-regulation-on-service-inventions-explanatory-note.doc.

  2. […] proposed service invention regulations for public comment, which I have separately blogged about.  https://chinaipr.com/2012/11/12/new-draft-of-service-inventor-remuneration-regulations-open-for-publi….  Comments are due December 3.  My blog on this issue resulted in a new high here for hits, […]

  3. […] regulation (in Chinese), an explanation accompanying the draft regulation (in Chinese), and this unofficial English translation of the draft […]

  4. […] inventions (the “Draft Regulation,” an English version is available at the following web-site: https://chinaipr.com/2012/11/12/new-draft-of-service-inventor-remuneration-regulations-open-for-publi…). The term “employment invention,” sometimes translated as “service invention,” is defined […]

  5. […] the State Intellectual Property Office (“SIPO”) governing employment inventions (available at :https://chinaipr.com/2012/11/12/new-draft-of-service-inventor-remuneration-regulations-open-for-publi…). Today I would like to complete the theme about the importance of building an IP portfolio in […]

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