Service invention practices in Taiwan and China

The relevant laws and practices of Taiwan and China are summarised as follows.

Legislation

The provisions of the Taiwan Patent Act stipulate the legitimate rights and obligations for inventions that are completed in an employment or a contractual relationship, including the ownership of patent application rights and that of granted patent rights, as well as the inventor’s remuneration.

The corresponding provisions in the People’s Republic of China (PRC) Patent Law and the Implementing Regulations also specify the definition, rights and interests of a service invention. Additionally, the State Intellectual Property Office of the PRC recently drafted the Regulations on Service Invention to further regulate the ownership of rights and the obligations to report a service invention, as well as the supervision and inspection of the competent authority.

"a service invention broadly encompasses an invention, a utility model, or a design completed within the scope of a person’s job when he or she is in an employment relationship."

Definition

According to the Taiwan Patent Act, a service invention broadly encompasses an invention, a utility model, or a design completed within the scope of a person’s job when he or she is in an employment relationship. However, any creation unrelated to work performed as part of an employee’s duties, but made through utilisation of the employer's resources or experience and not opposed by the employer, will not be regarded as a service invention based on the Taiwan Patent Act.

In China, a service invention includes two aspects:

An invention created by an employee in execution of the tasks of the employer; and

An invention created by taking advantage of the material and technical means of the employer.

In this regard, China’s definition of service invention is broader, including creations made through utilisation of the employer’s resources, even though it is unrelated to the job requirements.

Moreover, any invention created within a year of the employee’s resignation, retirement or change of employment, and where the creation of the invention relates to the employee’s original duties, or other tasks entrusted by the former employer, is still regarded as a service invention in China.

Ownership of rights

According to the Taiwan Patent Act, an employer of someone who makes a service invention is entitled to apply for a patent and owns the patent rights if the patent is granted. In return for the ownership of patent rights, the employer should pay reasonable remuneration to the employee who completed the invention. If an agreement for the ownership of rights is made between the employer and the employee, the agreement will prevail.

The PRC Patent Law stipulates the same entitlement to the employer. However, where a service invention is made through the utilisation of the employer’s resources, the ownership of rights may be negotiated by the employer and the employee. In other words, ownership of rights for a service invention made through the performance of tasks laid down by the employer is not negotiable in China and the employer must be endowed with the application right.

Remuneration

Although a general concept of “reasonable remuneration” is stipulated in Taiwanese patent law, it does not provide further guidance about the extent of reasonableness, the method of calculation or in what form payments should be made. All will be referred to an agreement made by both parties, or will be resolved in court if a dispute arises in this regard.

In comparison, the PRC Patent Law lays down specific rules on the extent of, spread and application of the patent, as well as the economic benefits yielded by exploitation of the patent. The Implementing Regulations also give a statutory minimum amount or percentage that must be provided to the inventor or creator annually for the profits gained from exploitation of the granted patent.

Companies should be cautious of the differences between the service invention laws and practices of these two jurisdictions.

Crystal J. Chen is an attorney at law and partner at Tsai, Lee & Chen. She can be contacted at: cjchen@tsailee.com.tw

James H.C. Su is a patent attorney at Tsai, Lee & Chen. He can be contacted at: info@tsailee.com.tw