Employment & Labor

On February 1, 2010, the Implementing Regulations for the Patent Law ("Patent Regulations") came into effect. The major change affecting all employers is a new requirement to compensate employees for any work-related invention they create once a patent is granted for the invention. Previously only State-owned companies had to pay a reward to employee-inventors.

In the absence of any relevant provisions in the company's policies or in an employment agreement, the employer must pay to an employee-inventor the following for most patents: RMB3000 as a one time reward for each invention patent;remuneration at least equal to 2% of the after-tax income derived from the invention; and 10% of the license fee, if any. Different payment requirements are applicable for design and utility patents.

It may be possible to avoid these statutory payments through appropriate company policies or by agreement between the company
and an employee.

Companies engaged in research activities that will generate inventions should be aware of this change and consider how best to structure their own employee-inventor reward plans in order to avoid having to meet the onerous statutory compensation requirements described above.

 

 

 

 

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