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Concepts for Inventions and Resources for Filing Patent Applications Provided by a Company May Be Insufficient To Prove That an Employee's Research Results Are an Invention Produced in the Course of the Employee's Duties
“Where an invention, a utility model, or a design is made by an employee in the course of performing his/her duties, the right to apply for a patent and the patent right thereof shall be vested in his/her employer and the employer shall pay the employee reasonable remuneration; where there is an agreement providing otherwise, such agreement shall prevail.” (Article 7, Paragraph 1 of the Patent Act). Therefore, in the event of doubt with respect to the ownership of a patent right for research work by an employee during his/her tenure, the first question to be addressed would be whether such work is carried out “in the course of performing the employee's duties”, and whether any special agreement was made between the parties.
In its judgment 2013 Min-Zhuan-Shang-20, dated November 14, 2013, the Intellectual Property Court (the "IP Court") gave its view on determining what constitutes an “invention produced in the course of employment”. The facts of the case are as follows: Party B was the general manager of Party A, a company. Both sides had previously agreed by way of contract that, if Party B used Party A's resources for his research, any results from such research would be shared by both parties. During Party B's employment, the chairman of Party A had provided to Party B the ideas, photographs, and opinions for development of new products and instructed Party B to develop new products, following which, Party B proposed his research ideas for a new product (hereinafter referred to as “the invention at issue”). Party B also leveraged Party A's manpower and funds to produce drawings, models, and production molds. Eventually, Party B solely applied for a new utility model patent Y (hereinafter referred to as “Patent Y”) based on the aforesaid research results and named himself as the sole creator; all expenses for the patent application were paid by Party A. Under these circumstances, Party A claimed that the invention at issue should vest in it on the ground of it being made in the course of Party B's employment, or alternatively even if it was not in the course of Party B's employment, it should vest in both parties as joint owners according with the contract agreed by both parties.
Despite Party A offering numerous witnesses in its attempt to prove that the research process for the invention at issue was not independently created by Party B, the IP Court, in its judgment 2013 Min-Zhuan-Shang-20, however, ruled in favor of Party B. The IP Court accepted Party B's argument that the provision of ideas by Party A's chairman was merely done in order to promote the company's business and as such was not essential information for the patent's development. In addition, any such ideas and materials were empirical or pure concepts or suggestions—i.e., they contained no essential technology for the patent. Although Party A's engineers had assisted in the drafting of the patent drawings and specification, they were merely documents essential to the administrative procedures of the patent application and thus had no substantive involvement in the research process. As for Party A's staff providing assistance in making models and then producing molds for manufacturing, the assistance was likewise provided with respect to the production process and therefore was unrelated to research and invention. Based on the aforesaid, the IP Court rejected the claim that Patent Y was a creation completed by Party B during his employment with Party A.
As for Party A's claim that both sides had agreed on sharing Party B's research results for any research conducted using Party A's resources, the IP Court took the view that the term “sharing of research results” in the contract did not amount to an agreement to have joint ownership of the patent right. Furthermore, Party A did not raise any objection during Party B's application for the patent in his own name. Accordingly, the court rejected Party A's claims.
The case was appealed to the Supreme Court, and on July 17, 2014, the Supreme Court (under 2014 Tai-Shang-1479) overturned and remanded the IP Court's decision. In the view of the Supreme Court, since both sides had expressly agreed to share the research results if Party B used Party A's resources to carry out any research, the IP Court's interpretation has ran counter to common sense by saying that it did not amount to both sides as “having joint ownership of the patent right”. The Supreme Court furthermore pointed out that as Party A had paid patent application expenses, given development ideas, drafted drawings, had oral communication with Party B during the drafting of drawings, and had participated in negotiations for manufacturing and production of molds, its claim of the patent at issue being jointly owned was therefore not without merit and should be accorded due consideration. As to the IP Court's decision regarding "the technical content of Patent Y was not a creation completed by Party B during his employment with Party A," the Supreme Court expressed no different opinions.