Report Q183
Employers' rights
to intellectual property
in the name of AIPPI
Chinese Group
By Chen Changhui
Xiong Lei
Li Yue
1.The State of positive law
1.1 The legal framework governing relations
between employers and employees in the field
of intellectual property rights.
Do these rules arise from provisions concerning
labor law or do these rules arise from provisions
concerning intellectual property rights.
ANS：These rules arise from provisions concerning
intellectual property rights, not labor law.
A complete legal framework defining the ascription
of intellectual property rights and protection
of the rights and interests between employers
and employees has been made and the laws and
regulations involved are as follows:
Contract Law, Patent Law and its Implementing
Regulation, Copyright Law and its Implementing
Regulation, Regulations on the Protection
of Layout-design of Integrated Circuits and
its Implementing Regulation, Regulations on
Computer Software Protection, Regulations
on the Protection of New Varieties of Plants
and its Implementing Regulation.
Can these rules may be considered as being
public policy rules (i.e. mandatory rules)
or, on the contrary, can they may be modified
by contractual relations between employees
and employers.
ANS：Some rules may be considered as being
mandatory rules, while others may be modified
by contractual relations between employees
and employers. Most law and regulations defining
the ascription of intellectual property rights
are mandatory rules. For example, paragraph
2 of rule6 of the Patent Law concerning the
ascription of a non-service invention-creation
and rule7 of the Patent Law that no entity
or individual shall prevent the inventor or
creator from filing an application for a patent
for a non-service invention-creation may be
considered to be mandatory rules. Rule11 of
the Copyright Law concerning the ascription
of copyrights and the definition of creator
and rule16 concerning the definition of work
created during the course of employment may
be considered as being mandatory rules. Rule11
of Implementing Regulation of the Copyright
Law is the interpretation of “tasks” and “the
material and technical resource” mentioned
in Rule16 of the Copyright Law may also be
considered to be mandatory rules. The rule9
of Regulations on Computer Software Protection
concerning the ascription of software copyrights
and the rule13 concerning the ascription of
software developed during the service may
also be considered to be mandatory rules.
Rule9 of Regulations on the Protection of
Layout-design of Integrated Circuits concerning
the exclusive right of layout-design may be
considered to be mandatory rules.
Other laws and regulations concerning the
ascription of rights are not mandatory and
may be modified by contractual relation. Most
exceptional situations have been pinpointed
under the laws and regulations. For example,
paragraph 1 and paragraph 3 of rule6 of the
Patent Law and rule11 of Implementing Regulations
of the Patent Law concerning the ascription
of invention-creation made in execution of
the tasks are not mandatory as rule3 of the
Patent Law prescribed that in respect to an
invention-creation made by a person using
the material and technical means of an entity
to which he belongs, where the entity and
the inventor or creator have entered into
a contract in which the right to apply for
and own a patent is provided for, such a provision
shall apply. Rule16 of the Copyright Law concerning
the ascription of work created during the
course of employment is not mandatory as this
ruleprescribed that the author of a work created
during the course of employment shall enjoy
the right of authorship, while the legal entity
or other organization shall enjoy the other
rights included in the copyright.
Some of the regulation concerning rewards
or remuneration are mandatory, while others
are non-mandatory, depends on the employer’s
character. In general, most regulations concerning
rewards and remuneration are mandatory, while
the amount of the reward and remuneration
are non-mandatory and are normally pinpointed
in the employment contract. It is difficult
for the employee to obtain additional rewards
and remuneration for his technical result
during the course of employment as most of
the time the amount of the reward and remuneration
has been defined in the employment contract
between a non state-owned enterprise and its
employee and this is a real situation between
a non state-owned enterprise and its employee.
The reward and remuneration, except regular
wages and bonuses, will mainly rest upon whether
the employer is willing to improve the labor
enthusiasm of it’s employee through rewards
and remuneration.
Rule326 of the Contract Law: If the right
to use or to transfer a service-related technological
result belongs to a legal person or any other
organization, the legal person or that organization
may conclude a technology contract on the
said service-related technological result.
The legal person and or that organization
shall deduct a certain percentage of the proceeds
from using and transferring the service-related
technological result so as to give rewards
or remuneration to the person achieving the
service-related technological result. When
the legal person or that organization concludes
a technology contract to transfer the service-related
technological result, the person achieving
the service-related technological result shall
have the priority to acquire the transfer
on equal conditions. This ruleapplies to all
service-related technological results including
patents, new varieties of plant, layout design
of integrated circuit and computer software
and belongs to the mandatory regulation. However,
this ruledoes not mention the amount of the
reward and remuneration.
In respect to patents, rule16 of the Patent
Law in which the employer should provide the
employee with reasonable rewards and remuneration
is mandatory and all the employer have to
come to time. The amount of the reward and
remuneration under rule74-76 of Implementing
Regulation of the Patent Law is mandatory
for state-owned enterprises, while it is not
mandatory for other entities. Other entities
have the choice to decide whether to keep
the amount of the reward and remuneration
for reference or not. In addition, rule74-76
of Implementing Regulation of the Patent Law
has also prescribed the time limit of payment
of rewards and remuneration and such ruleis
only mandatory for state-owned enterprises,
while it is not mandatory for other entities.
In respect to new varieties of plants, Regulations
for the Protection of New Varieties of Plants
has prescribed the obligation that the State
provide the rewards to the entities or individuals
who accomplished the breeding of a new variety
of plant and this belongs to mandatory regulation
which the related government has to enforce.
In particular, any entities or individuals
who has accomplished the breeding of a new
variety of plant, which brings benefit to
the State or the public as a whole and is
of great value in application, shall be rewarded
by the People's Government at or above the
county level or by the relevant department
(rule4 of Regulations for the Protection of
New Varieties of Plants).
In respect to computer software, the regulation
of reward mentioned in Regulations on Computer
Software Protection is non-mandatory. The
legal person or other organizations may provide
the reward to the individual who developed
the software. However, the mandatory regulation
of the Contract Law would apply to a technology
contract.
In respect to copyrights, rule12 of Implementing
Regulation of the Copyright Law entered into
force on 15 September 2002 has prescribed
distribution of license remuneration during
the two years after the completion of work
created during the course of employment as
follows: during the two years after the completion
of work created during the course of employment,
the author, with the consent of the legal
entity or organization, authorizes a third
party to exploit the work in the same way
as the legal entity and receives remuneration.
The remuneration shall be distributed between
the author and the entity or organization
at an agreed ratio. In other words, the ruleleaves
the question on how to distribute the license
remuneration to be resolved by contract between
both parties.
1.2 For each of the intellectual property
rights (patents, plant variety rights, copyright
or author’s rights, patterns and models, and
software rights; trademarks and brand rights
are expressly excluded from the scope of the
study in question) what are the legal solutions
concerning ownership of rights over intellectual
creations:
ANS: Firstly, paragraph 1 and paragraph 2
of Chapter 18 of the technology contract under
the Contract Law pinpoint the ascription of
intellectual property concerning the technology
contract (rule326-328 and rule339-341).
Rule326 has defined that a “Service-related
technological result” refers to a technological
result achieved in the performance of a task
assigned by the legal person or any other
organization, or achieved primarily by making
use of the materials and technical conditions
of the legal person or any other organization.
The legal person and or that organization
shall deduct a certain percentage of the proceeds
for using and transferring the service-related
technological result so as to give rewards
or remuneration to the person achieving the
service-related technological result. When
the legal person or that organization creates
a technology contract to transfer the service-related
technological result, the person achieving
the service-related technological result shall
have the priority to acquire the transfer
on equal conditions. This ruleapplies to all
service-related technological results including
patents, new varieties of plants, layout design
of integrated circuits and computer software
and belong to the mandatory regulation. However,
this ruledoes not mention the amount of the
reward and remuneration.
In respect to patents, the Patent Law and
Implementing Regulation of the Patent Law
has pinpointed the ascription of the right
to apply for a patent and the patent rights
and the reward and remuneration to inventor
and creator. Rule6 of the Patent Law prescribes
under what conditions the right to apply for
a patent and which patent rights belongs to
the employer and under what conditions they
belong to the employee. Rule7 of the Patent
Law prescribed that no entity or individual
shall prevent the inventor or creator from
filing an application for a patent for a non-service
invention-creation. Rule16 of the Patent Law
prescribed the obligation that the employer
shall award the inventor and creator some
form of reward and remuneration. Rule11 of
Implementing Regulation of the Patent Law
has made further interpretation for “mainly
use the material and technical means of the
entity” of rule6 of the Patent Law. Rule74-76
of Implementing Regulation of the Patent Law
has made the interpretation for the obligation
of rewards and remuneration of rule16 of the
Patent Law and defined the amount that state-owned
enterprises should award an inventor and creator
(mandatory regulation)。Rule77 of Implementing
Regulation of the Patent Law prescribed that
other entities except state-owned enterprises
may take rule74-76 of Implementing Regulation
of the Patent Law as reference (non mandatory
regulation). These regulations are consistent
with the regulation of the Contract Law.
In respect to new varieties of plants, rule7
of Regulations for the Protection of New Varieties
of Plants has defined the ascription of variety
rights. According to this article, for an
item of service breeding, made by a person
in execution of the tasks of the entity to
which he belongs or made by him mainly by
utilising the material means of the entity,
the right to apply for the variety right belongs
to the entity. For any non-service breeding,
the right to apply for the variety right belongs
to the individual who has accomplished the
breeding. After the application is approved,
the variety right shall belong to the applicant.
Rule5 of The Rules for the Implementation
of the Regulations of the People's Republic
of China On the Protection of New Varieties
of Plants (Forest Part) and rule7 of IMPLEMENTING
RULES FOR THE REGULATIONS OF THE PEOPLE’S
REPUBLIC OF CHINA ON THE PROTECTION OF NEW
VARIETIES OF PLANTS (AGRICULTURE PART) has
made further interpretations for the conditions
that belong to service breeding. According
to these two articles: the variety right would
belong solely to the employer under at least
one of the four conditions. 1) the breeding
is accomplished during the employee’s own
work; 2) the breeding is accomplished by any
person in performing tasks assigned by the
entity to which he belongs and which is in
relation to his work; 3) the breeding is accomplished
by any person whilst performing work in his
original entity or performing tasks assigned
to him by his original entity and the timeframe
is within three years after he leaves his
original entity; or 4) the breeding is accomplished
by using the capital, instrument, equipment,
testing ground, propagating resources and
other breeding materials as well as technical
references not-open-to-the-public which are
owned by the entity to which he belongs. Regulations
for the Protection of New Varieties of Plants
and its Implementing Regulation has neither
prescribed the obligation that the employer
shall award the reward and remuneration which
is different from the Patent Law and its Implementing
Regulation nor prescribed the ratio of the
reward. However, rule4 of this regulation
prescribed that any entity or individual who
has accomplished the breeding of a new variety
of plant, which brings benefit to the State
or the public as a whole and is of great value
in application, shall be rewarded by the People's
Government at or above the county level or
by the relevant department. The employer should
award the individual who has accomplished
the breeding according to the regulation of
the Contract Law once the employer has signed
the technology contract with the third party
in respect to service-breeding.
In respect to copyrights, paragraph 2 of
the Copyright Law (revised on October 27,
2001) has defined the ascription of copyrights.
Rule11 prescribes that except where otherwise
provided in said law, the copyright of a work
shall belong to its author and also provides
the definition of author. Where a work is
created according to the intention and under
the supervision and responsibility of a legal
entity or other organization, such legal entity
or organization shall be deemed to be the
author of the work. Rule15 prescribed that
the copyright in a cinematographic work and
any work created by an analogous method of
film production shall be enjoyed by the producer
of the work, but the scriptwriter, director,
cameraman, lyricist, composer, and other authors
thereof shall enjoy the right of authorship
in the work, and have the right to receive
remuneration pursuant to the contract concluded
with the producer. The authors of the screenplay,
musical works and other works that are incorporated
in a cinematographic work and work created
by virtue of an analogous method of film production
and can be exploited separately shall be entitled
to exercise their copyright independently.
Rule16 has pinpointed the definition of work
created during the course of employment that
a work created by a citizen in the fulfillment
of tasks assigned to him by a legal entity
or other organization shall be deemed to be
a work created during the course of employment.
This rulealso prescribed the rights and obligations
of employer and employee. Paragraph 1 of rule16
prescribed that the copyright in such work
shall be enjoyed by the author, except for
the provisions of the second paragraph of
this article，the legal entity or other organization
shall have a priority right to exploit the
work within the scope of its professional
activities. In any of the following cases
the author of a work created during the course
employment shall enjoy the right of authorship,
while the legal entity or other organization
shall enjoy the other rights included in the
copyright and may reward the author:(1) drawings
of engineering designs and product designs
and maps, computer software and other works
created during the course of employment mainly
with the material and technical resource of
the legal entity or other organization and
under its responsibility; (2) works created
during the course of employment where the
copyright is, in accordance with laws, administrative
regulations or contracts, enjoyed by the legal
entity or other organization. During the two
years after the completion of the work, the
author shall not, without the consent of the
legal entity or other organization, authorize
a third party to exploit the work in the same
way as the legal entity or other organization
does. Rule11 of Implementing Regulation of
the Copyright Law is the interpretation of
“tasks” and “the material and technical resource”
mentioned in rule16 of the Copyright Law.
In respect of copyright, rule12 of Implementing
Regulation of the Copyright Law (effective
as of 15 September 2002) has prescribed distribution
of license remuneration during the two years
after the completion of a work created during
the course of employment as follows: during
the two years after the completion of a work
created during the course of employment, the
author, with the consent of the legal entity
or organization, authorizes a third party
to exploit the work in the same way as the
legal entity and receives remuneration, the
remuneration shall be distributed between
the author and the entity or organization
at an agreed ratio.
In respect to the layout-design of integrated
circuits, rule9 of Regulations on the Protection
of Layout-design of Integrated Circuits (effective
as of October 1, 2001) prescribed the ascription
of the exclusive right. The exclusive right
of the layout-design shall belong to its creator,
except where otherwise provided in these regulations.
Where a layout-design is created according
to the will and under the charge of a legal
person or other organization, which shall
also bear responsibility therefrom, such legal
person or other organization shall be the
creator. Where a layout-design is created
by a natural person, the natural person shall
be the creator.
In respect to computer software, rule9 of
Regulations on Computer Software Protection
provided the definition of software developer.
Rule12 has prescribed the ascription of software
copyright in fulfilling a task assigned by
a governmental department. The ownership and
exercise of the copyright of an item of software
developed in fulfilling a task assigned by
a governmental department shall be stipulated
by a letter of assignment or by a contract.
Where no explicit stipulation is made in the
letter of assignment or in the contract, the
copyright of the software shall go to the
legal entity or other organization accepting
the assignment. Rule13 prescribes under what
kind of conditions the software copyright
belongs to the employer. Where an item of
software developed by a natural person during
his service to the legal entity or other organization
falls into any of the following provisions,
the copyright of the software shall be owned
by the legal entity or other organization,
and the legal entity or other organization
may reward the natural person who has developed
the software: The software is developed in
accordance with developmental objectives explicitly
assigned in the line of duty; (2) The developed
software is a foreseeable or natural result
of his carrying on activities in the line
of duty; or (3) The software is one that is
developed mainly by utilizing the fund, special
equipment, undisclosed special information
or other material and technical facilities
of a legal entity or other organization and
for which the legal entity or other organization
is responsible for.
Do these rights originally belong to the
employer or the employee?
ANS: Rule326 of Chapter 18 of the Contract
Law prescribed that ownership, the right of
use and the right of assignment of a service-related
technological result that an individual working
for an entity achieved belongs to the entity.
The individual may obtain a reward and remuneration.
When the entity transfers the service-related
technological result, the individual achieving
the result shall have the priority to acquire
the transfer on equal conditions. In other
words, the right, of use and the right of
assignment of a service-related result including
patents, new varieties of plants, layout design
of integrated circuits, computer software,
etc. belongs at first to the entity. However,
according to rule6 of the Patent Law, patents
of an invention-creation made by a person
using the material and technical means of
an entity to which he belongs, where the entity
and the inventor or creator have entered into
a contract in which the right to apply for
and own a patent is provided for, such a provision
shall apply. Therefore, service-related invention-creations
may at first belong to the employee when entering
into a contract.
In respect to copyrights, a work created
by a citizen in the fulfillment of tasks assigned
to him by a legal entity or other organization
shall be deemed to be a work created during
the course of employment. The copyright of
such work shall be enjoyed by the author,
except for the provisions of the second paragraph
of rule16 of the Copyright Law. Therefore,
the copyright belongs to the author at the
beginning.
If these rights belong to the employer from
the outset, what are the conditions for this
attribution?
ANS: The conditions that when these rights
belong to the employer have been specified
in the law and regulation of the PRC, including
the Patent Law and its Implementing Regulation,
the Copyright Law and its Implementing Regulation,
Regulations on the Protection of Layout-design
of Integrated Circuits and its Implementing
Regulation, Regulations on Computer Software
Protection, Regulations for the Protection
of New Varieties of Plants and its Implementing
Regulation, etc. For example, rule6 of the
Patent Law prescribed that an invention-creation,
made by an individual in execution of a task
of the entity to which he belongs, or made
by him mainly by using the material and technical
means of the entity is a service invention-creation.
For a service intention-creation, the right
to apply for a patent belongs to the entity.
After the application is approved, the entity
shall be the patentee. In respect to an invention-creation
made by an individual using the material and
technical means of an entity to which he belongs,
where the entity and the inventor or creator
have entered into a contract in which the
right to apply for and own a patent is provided
for, such a provision shall apply. Rule11
of Implementing Regulation of the Patent Law
has made interpretation for the rule6 of the
Patent Law that "Service invention-creation
made by an individual in execution of the
tasks of the entity to which he belongs"
mentioned in rule6 of the Patent Law refers
to any invention-creation made: (1) in the
course of performing his own duty; (2) in
the execution of any task, other than his
own duty, which was entrusted to him by the
entity to which he belongs; (3) within one
year from his resignation, retirement or change
of work, where the invention-creation relates
to his own duty or the other task entrusted
to him by the entity to which he previously
belonged. Paragraph 2 of rule11 prescribed
that where a work is created according to
the intention and under the supervision and
responsibility of a legal entity or other
organization, such legal entity or organization
shall be deemed to be the author of the work.
Rule16 of the Copyright Law prescribed that
a work created by a citizen in the fulfillment
of tasks assigned to him by a legal entity
or other organization shall be deemed to be
a work created during the course of employment.
The copyright of such work shall be enjoyed
by the author, subject to the provisions of
the second paragraph of this article, provided
that the legal entity or other organization
shall have a priority right to exploit the
work within the scope of its professional
activities. During the two years after the
completion of the work, the author shall not,
without the consent of the legal entity or
other organization, authorize a third party
to exploit the work in the same way as the
legal entity or other organization does. In
any of the following cases the author of a
work created during the course of employment
shall enjoy the right of authorship, while
the legal entity or other organization shall
enjoy the other rights included in the copyright
and may reward the author:
(1) drawings of engineering designs and
product designs and maps, computer software
and other works created during the course
of employment mainly with the material and
technical resource of the legal entity or
other organization and under its responsibility;
(2) works created during the course of employment
where the copyright is, in accordance with
laws, administrative regulations or contracts,
enjoyed by the legal entity or other organization.
Rule11 of Implementing Regulation of the
Copyright Law prescribed that the “assigned
tasks” in the provision of Rule16, paragraph
one of the Copyright Law, which relates to
works created during the course employment,
shall refer to duties which citizens should
perform in the legal entity or organization.
The “material and technical resources” used
for the creation of works during the course
employment in the provision of Rule16, paragraph
two of the Copyright Law refer to fund, equipment
or reference material which the legal entity
or organization has provided the citizens
to accomplish the creation.
Rule13 of Regulation on Protection of Computer
Software prescribed that where an item of
software developed by a natural person during
his service the legal entity or other organization
falls into any of the following provisions,
the copyright of the software shall be owned
by the legal entity or other organization,
and the legal entity or other organization
may reward the natural person who has developed
the software:
(1) The software is developed in accordance
with development objectives explicitly assigned
in the line of duty;
(2) The developed software is a foreseeable
or natural result of his carrying on activities
in the line of duty; or
(3)The software is one that is developed
mainly by utilizing the fund, special equipment,
undisclosed special information or other material
and technical facilities of a legal entity
or other organization and for which the legal
entity or other organization is responsible
for.
Rule7 of Regulations for the Protection
of New Varieties of Plants and its Implementing
Regulation prescribed that for an item of
service breeding, made by a person in execution
of the tasks of the entity to which he belongs
or made by him mainly by utilising the material
means of the entity, the right to apply for
the variety right belongs to the entity. For
any non-service breeding, the right to apply
for the variety right belongs to the individual
who has accomplished the breeding. After the
application is approved, the variety right
shall belong to the applicant.
Rule9 of Regulations on the Protection of
Layout-design of Integrated Circuits the exclusive
right of layout-design shall belong to its
creator, except where otherwise provided in
these regulations. Where a layout-design is
created according to the will and under the
charge of a legal person or other organization,
which shall also bear responsibility therefrom,
such legal person or other organization shall
be the creator. Where a layout-design is created
by a natural person, the natural person shall
be the creator.
And if these rights originally belong to
the employee, does the employer have the right
to have them transferred to it and under what
conditions?
ANS: According to Chinese Law regarding patent
technology, the inventor working for an entity
has no material right. The invention-creation
belongs to the employer and the situation
does not exist that the inventor have the
invention-creation transferred to employer
and employer award remuneration to the inventor.
It is mandatory for the state-owned entity
to award remuneration to the inventor. But
there is no particular regulation concerning
how non state-owned entities must award the
inventor.
A work created by a citizen in the fulfillment
of tasks assigned to him by a legal entity
or other organization shall be deemed to be
a work created during the course employment.
The copyright in such work shall be enjoyed
by the author, subject to the provisions of
the second paragraph of this article, provided
that the legal entity or other organization
have a priority right to exploit the work
within the scope of its professional activities.
During the two years after the completion
of the work, the author shall not, without
the consent of the legal entity or other organization,
authorize a third party to exploit the work
in the same way as the legal entity or other
organization does.
As far as it concerns patents, is the employer,
from the outset, the owner of the intellectual
property rights over inventions made by employees
in the context of their employment contract
and in the performance of their tasks?
Yes, however, the employee has the right
to obtain rewards and remuneration as inventor
and creator and to be named as inventor and
creator in the patent document. As an exception,
in respect to an invention-creation made by
a person using the material and technical
means of an entity to which he belongs, where
the entity and the inventor or creator have
entered into a contract in which the right
to apply for and own a patent is provided
for, such a provision shall apply.
1.3 Procedures concerning potential disputes
concerning the ownership of intellectual property
rights over creations by employees.
Are these disputes within the jurisdiction
of labor courts or, on the contrary, are they
within the jurisdiction of the courts which
are usually competent for intellectual property
disputes?
These disputes are within the jurisdiction
of the courts which are usually competent
for intellectual property disputes.
According to rule1 and rule2 of <<Several
Provisions of the Supreme People's Court on
Issues Relating to Application of Law to Adjudication
of Cases of Patent Disputes>> (Adopted
on 19 June 2001 at the 1180th Meeting of the
Adjudication Committee of the Supreme People's
Court) : Rule1. The people's court accepts
following cases of patent disputes:
1. disputes over the ownership of the right
to apply for patent;
2. disputes over the ownership of the patent
right;
3. disputes over contracts for assignment
of the patent right or the right to apply
for patent;
4. disputes arising from patent infringement;
5. disputes arising from counterfeiting
other persons' patents;
6. disputes over the exploitation fee after
the publication of the applications for patent
for invention and before the grant of the
patent right;
7. disputes over the reward and remuneration
for the inventors or creators of service inventions;
8. cases of pre-litigation requests for
stopping infringement or for property preservation;
9. disputes over the qualification of inventors
or creators;
10. cases of dissatisfaction with the reexamination
decisions by the Patent Reexamination Board
to uphold rejection of applications;
11. cases of dissatisfaction with the reexamination
decisions by the Patent Reexamination Board
on requests for invalidation of the patent
right;
12. cases of dissatisfaction with the reexamination
decisions by the Patent Administrative Organ
under the State Council on execution of compulsory
licenses;
13. cases of dissatisfaction with the adjudication
by the Patent Administrative Organ under the
State Council on the royalties for execution
of compulsory licenses;
14. cases of dissatisfaction with the administrative
reexamination decisions by the Patent Administrative
Organ under the State Council;
15. cases of dissatisfaction with the administrative
decisions by the administrative authorities
for patent affairs; and
16. any other cases of patent disputes.
Rule2. Patent dispute cases of first instance
shall be under the jurisdiction of the intermediate
people's court of the seats of the People's
Government of the Provinces, Autonomous Regions
and Municipalities under the Central Government
and the intermediate people's court designated
by the Supreme People's Court.
According to rule54 of the Copyright Law:
Rule54: A dispute over copyright may be settle
by mediation. lt may also be submitted for
arbitration to a copyright arbitration body
under a written arbitration agreement concluded
between the parties or under the arbitration
clause in the contract.
Any party may institute proceedings directly
in the People's Court in the absence of a
written arbitration agreement or in the absence
of an arbitration clause in the contract.
According to rule1 and rule2 of Interpretation
by the Supreme People's Court of Several Issues
Relating to Application of Law to Trial of
Cases of Civil Disputes over Copyright (Adopted
at the 1246th Meeting of the Adjudication
Committee of the Supreme People's Court on
12 October 2002 and entering into force on
15 October 2002): Rule1: The people's court
shall accept cases of civil dispute over copyright
as the following:
(1) cases of dispute over copyright and
copyright-related rights, interests, attribution
of rights, infringement and contracts;
(2) cases of application for pre-trial cessation
of acts infringing copyright or copyright-related
rights and interests, cases of application
for pre-trial property or evidence preservation;
and
(3) other cases of dispute over copyright
and copyright-related rights and interests.
Rule2 The cases of civil dispute over copyright
shall be under the jurisdiction of the people's
courts at the intermediate or higher levels.
The higher people's court may, according
to the practical situations of jurisdiction,
determine that several grassroots people's
courts have the jurisdiction over first-instance
cases of dispute over copyright.
According to rule43 of Regulations for the
Protection of New Varieties of Plants and
its Implementing Regulation: Where a dispute
arises between parties over the attribution
of the right to apply for the variety right
with regard to a new plant variety and of
the variety right, either of them may institute
proceedings in the people's court.
According to rule1 and rule3 of Interpretation
by the Supreme People's Court of Several Issues
Relating to Trial of Cases of Disputes over
new varieties of plant (Adopted on 25 December
2000 and entering into force on 15 October
2002): The dispute of first instance concerning
the right to apply for new varieties of plant
and varieties rights shall be under the jurisdiction
of the intermediate people's court of the
seats of the People's Government of the Provinces,
Autonomous Regions and Municipalities under
the Central Government and the intermediate
people' courts designated by the Supreme People's
Court.
Is there a prior conciliation stage and if
so, does it take place before the same court
as the one having jurisdiction over disputes
concerning the ownership or conditions for
use of intellectual property rights over creations
made by employees?
ANS: Yes, it takes place before the same
court as the one having jurisdiction over
disputes concerning the ownership or conditions
for use of intellectual property rights over
creations made by employees.
According to rule85 of the Civil Procedure
Law: in handling civil cases, the people’s
court shall distinguish between right and
wrong and conduct conciliation on the basis
of the principle of voluntariness of the parties
and evident facts.
Does the termination of the employment contract
have an influence on the action which an employer
can bring to obtain the attribution of rights
over an employee’s creation?
Within some specified period after the termination
of the employment contract, the termination
of the employment contract has no influence
on the action which an employer can bring
to obtain the attribution of rights over an
employee’s creation.
In particular, according to rule11 of Implementing
Regulation of the Patent Law, any invention-creation
made within one year from an employee’s resignation,
retirement or change of work, where the invention-creation
relates to his own duty or other tasks entrusted
to him by the entity to which he previously
belonged is a service invention-creation and
the right to apply for a patent belongs to
the entity. After the application is approved,
the entity shall be the patentee. The rule5
of the Rules for the Implementation of the
Regulations of the People's Republic of China
On the Protection of New Varieties of Plants
(Forest Part) and rule7 of IMPLEMENTING RULES
FOR THE REGULATIONS OF THE PEOPLE’S REPUBLIC
OF CHINA ON THE PROTECTION OF NEW VARIETIES
OF PLANTS (AGRICULTURE PART) prescribed that
the breeding accomplished by any person, which
is related to the work in his original entity
or the tasks assigned to him by his original
entity, within three years after he leaves
his original entity is a service-breeding
and the variety rights belong to entity. These
regulations could prevent the employee from
applying for a patent or new varieties of
plant after leaving his original entity or
retirement in his own name of if the aforesaid
patent and new varieties were made before
leaving his original entity or retirement.
Such regulations are good for adjusting the
relations between employer and employee in
respect of service invention-creation.
In respect to an invention-creation made
by a person using the material and technical
means of an entity to which he belongs, where
the entity and the inventor or creator have
entered into a contract in which the right
to apply for and own a patent is provided
for, such a provision shall apply.
Is there a limitation or statute barring
of the exercise of an action concerning the
attribution of ownership rights over an invention
or creation made by an employee in the context
of an employment contract?
No.
Can the employee require the filing of a
patent application in order to protect his
invention or his other creations (registering
patterns and models, etc.)?
Yes，the employee may ask the employer to
file the application in order to protect his
invention or his other creations. Whether
the application would be filed would solely
rest upon the decision of employer. Normally,
the employer would consider the factors of
different aspects, such as management direction,
business accounting, protection strategy,
foreground of market, etc. Therefore, the
employer should have the right to decide what
kind of service-related creations should be
filed for patent registration or other kind
of protection.
1.4 In regards to employer rights, is there
a difference in status between employees in
the private sector and researchers in universities
or research institutes which receive public
funding.
Yes, there is a difference in status between
employees in state-owned enterprises and non
state-owned enterprises.
In general, for patents, non state-owned
entities have more decision-making power than
state-owned entities. Accordingly, the employee
in the non state-owned entity has less rights
than an employee in state-owned entity in
respect to intellectual property. For example,
some regulations, such as the amount of the
reward and remuneration awarded to an inventor
or creator, are mandatory for state-owned
entities (including universities and research
institutes). For the employer of a non state-owned
entity, it is mandatory to award its relative
employee, while the particular amount of the
reward is governed under the employment contract.
It will solely rest upon the non state-owned
entity to decide whether the rule74-76 would
be taken as reference.
There are not many differences in respect
to other intellectual property.
1.5 Is compensation due to employees in return
for the rights of employers over the creations
made by employees?
Yes, it is the legal obligation of the employer
to award the employee a reward and remuneration.
This is mainly to improve the employees enthusiasm
for invention-creation.
According to rule326 of contract law, the
legal person and or that organization shall
deduct a certain percentage of the proceeds
from using and transferring the service-related
technological result so as to give rewards
or remuneration to the person achieving the
result. Normally the amount of reward or remuneration
is prescribed in the employment contract beforehand.
Rule16 has also prescribed the obligations
of rewards and remuneration to inventor or
creator in respect of service-related invention.
Rule74-76 has also prescribed the amount of
reward and remuneration for state-owned entities.
According to rule77 of Implementing Regulation
of the Patent Law, non state-owned entities
can take rule74-76 as reference.
Rule12 of Implementing Regulation of the
Copyright Law prescribed distribution of the
license benefit within two years after finishing
the service-work that during the two years
after the completion of a work created during
the course employment, the author, with the
consent of the legal entity or organization,
authorizes a third party to exploit the work
in the same way as the legal entity and receives
remuneration, the remuneration shall be distributed
between the author and the entity or organization
at an agreed ratio.
Rule4 of Regulations for the Protection of
New Varieties of Plants and its Implementing
Regulation prescribed that any entity or individual
who has accomplished the breeding of a new
variety of plant, which bears on the interest
of the State or the public interest and is
of great value in application, shall be rewarded
by the People's Government at or above the
county level or by the relevant department.
Regarding copyrights, there is no issue regarding
the reward and remuneration of the employer.
Work created by a citizen in the fulfillment
of a task assigned to him by a legal entity
or other organization shall be deemed to be
a work created during the course employment.
The copyright in such work shall be enjoyed
by the author, subject to the provisions of
the second paragraph of this article, provided
that the legal entity or other organization
shall have a priority right to exploit the
work within the scope of its professional
activities. During the two years after the
completion of the work, the author shall not,
without the consent of the legal entity or
other organization, authorize a third party
to exploit the work in the same way as the
legal entity or other organization does.
Regulations on the Protection of Layout-design
of Integrated Circuits prescribed neither
the obligations that employer award the employee
the reward at a specific reward ratio. However,
according to rule326 of the Contract Law,
The legal person and or that organization
shall deduct a certain percentage of the proceeds
from using and transferring the service-related
technological result so as to give rewards
or remuneration to the person achieving the
service-related technological result.
Rule13 of Regulations on Computer Software
Protection prescribed that the legal entity
or other organization may reward the natural
person who has developed the software.
Do domestic laws provide employees with a
right to compensation (financial or in nature)
in return for the transfer of rights over
their creations to their employers?
In accordance with Chinese Law, the inventor
working for a legal entity has no material
right and the invention made by the inventor
belongs to the employer. It is not the issue
that the inventor would transfer the invention-creation
to the employer and obtain remuneration from
the employer. It is mandatory for a state-owned
entity to award remuneration to the inventor.
However, there is no particular regulation
regarding how the non state-owned entity would
award the inventor.
How is this compensation calculated?
In respect to patents, rule74-76 of Implementing
Regulation of the Patent Law prescribed the
amount and ratio of the reward and remuneration
that state-owned entities should award the
employee. Rule74 prescribed that any state-owned
enterprise or institution granted a patent
right shall award to the inventor(s) or creator(s)
of the invention-creation a sum of money as
prize within three months from the date of
the announcement of the patent grant. The
sum of the money prize for a patent for invention
shall not be less than 2000 Yuan (approximately
USD240); the sum of money prize for a patent
for utility model or design shall not be less
than 500 Yuan (approximately USD60). Where
an invention-creation was made on the basis
of an inventor's or creator's proposal adopted
by the entity to which he belongs, the state-owned
enterprise or institution granted the right
shall award to him a money prize liberally.
Any enterprise holding the patent right may
include the said money prize paid to such
inventors or creators into its production
cost; any institution holding the patent right
may disburse the said money prize out of its
operating expenses.
Rule75 prescribes that any stated-owned enterprise
or institution granted a patent right shall,
after exploiting the patent for invention-creation
within the duration of the patent right, draw
each year from any increase in profits after
taxation a percentage of not less than 2％
due to the exploitation of the said patent
for invention or the utility model, or a percentage
of not less than 0.2％ due to the exploitation
of the said patent for design, and award it
to the inventor or creator as remuneration.
The enterprise or institution shall otherwise,
by making reference to the said percentage,
award a lump sum of money to the inventor
or creator as remuneration.
Rule76 prescribes that where any state-owned
enterprise or institution granted a patent
right authorizes other entities or individuals
to exploit it’s patent, shall, after taxation,
draw a percentage of not less than 10％ from
the fees for the authorization of exploitation
of the said patent it received and award it
to the inventor or creator as remuneration.
Rule77 prescribes that the other Chinese entities
or institutions may award to the inventor
or creator money prize and remuneration by
making reference to the provisions in this
chapter.
In fact, many state-owned enterprises and
non state-owned enterprises award much more
reward to inventors. For example, the sum
of money prize for a patent for invention
is 5000 Yuan (approximately USD600) and the
percentage would be 30％. However, some non
state-owned enterprises refuse to award the
employee a reward and remuneration except
for regular wages and bonus with their reason
being that the regular wages and bonuses have
included the reward.
Regarding copyrights, according to rule12
of Implementing Regulation of the Copyright
Law: the remuneration shall be distributed
between the author and the entity or organization
at an agreed ratio.
No such ruleexist in the regulation concerning
other intellectual property.
What is the time limit for prescription or
statute-barring of a claim for payment of
this compensation?
ANS: Rule74 of Implementing Regulation of
the Patent Law prescribed that any state-owned
enterprise or institution granted a patent
right shall award to the inventors or creators
of the invention-creation a sum of money as
prize within three months from the date of
the announcement of the patent grant. Rule75
prescribed that any stated-owned enterprise
or institution granted a patent right shall,
after exploiting the patent for invention-creation
within the duration of the patent right, draw
each year from any increase in profits after
taxation a percentage of not less than 2％
due to the exploitation of the said patent
for invention or the utility model, or a percentage
of not less than 0.2％ due to the exploitation
of the said patent for design, and award it
to the inventor or creator as remuneration.
Rule76 prescribed that where any state-owned
enterprise or institution granted patent right
authorizes other entities or individuals to
exploit its or his patent, it shall, after
taxation, draw a percentage of not less than
10％ from the fees for the authorization of
exploitation of the said patent it received
and award it to the inventor or creator as
remuneration.
1.6 Is a significant level of dispute in
their countries concerning the ownership and
use of rights over intellectual creations
made by employees, and give a general opinion
on the effectiveness and/or efficiency of
the national system?
ANS: Yes, there are some disputes concerning
the ownership and use of rights over intellectual
creations made by employees. Most disputes
took place along with the reform of Chinese
state-owned entities and the establishment
and development of a market economy.
For state-owned entities, the disputes are
mainly concentrated on whether or not an invention
is a service-related invention. In many situations,
the tasks that state-owned entities disposed
or arrange is not so proper and the effect
is that the scientific researcher is unable
to exert to an usual extent. Many people have
used the working time in the process of fulfilling
the invention and used the material conditions
of the entity, more or less. Under this situation,
the dispute concerning the ascription of invention-creation
would have occurred between the employer and
employee. In addition, many entities lack
intellectual property management systems that
would be strict and effective (including an
experiment file management system, a confidential
system, an approving system before filing
the patent application, etc.). Some employees
have filed the service-related technical result
in their own name. In one hand, the ratio
of non service-related invention within the
total number of application is higher than
the normal international level. Accordingly,
some disputes have occurred.
For the non state-owned entity, the dispute
would mainly concentrate on whether the amount
of the reward and remuneration is reasonable.
According to rule16 of the Patent Law, the
entity granted the patent should award the
inventor or creator of the service-related
invention-creation. Once the patent of invention-creation
has been exploited, the employer should award
inventor or creator the reasonable remuneration
in accordance with the scope of application
and the economic benefit. This is a mandatory
rulewhich is applied to all the entities.
State-owned entities should award “reasonable
remuneration” according to rule74-76 of Implementing
Regulation of the Patent Law. However, whether
the non state-owned entities would take the
rule74-76 as reference or not would depend
on its decision. Therefore, the opinion concerning
“reasonable remuneration” would be different
between a non state-owned entity and its employee
and the disputes would be handled accordingly.
In the past few years, the dispute in this
regard is going down mainly because intellectual
property has become popular and the management
system of intellectual property within many
entities including state-owned entities and
some non-state-owned entities of large scale
have become much better and invention-creation
has obtained more recognition from the employer.
2. Suggestions with respect to international
harmonization
2.1 Do the groups think that such harmonization
is desirable on the international level for
each of the types of intellectual property
rights?
ANS: Yes. The employees of many companies,
including their affiliates may come from different
countries along with increasingly development.
The employees have difficulty in knowing under
what conditions they would have the right
of research result and whether they should
be awarded the relative remuneration in the
working country, because of the difference
in legal structures, employees are unclear
what to do, even if they know the law in their
own country well. On the other hand, the capital
would flow to the country and regions which
would be more beneficial to employers and
the countries who are dedicated to protecting
the intellectual rights and benefits of employees
may encounter the risk of loosing capital.
Therefore, an international standard harmonization
would be good to protect the benefit of both
employer and employee.
In our opinion, we may conduct harmonization
concerning what kind of ruleshould be prohibited
to put into the employment contract and whether
the employer or employee would enjoy the intellectual
property initially. However, it is not proper
to specify the ratio of remuneration in respect
to the private sector as the cost and risks
would be apportioned by many projects in respect
to particular research projects. The enthusiasm
of investors would be impacted as investors
would bear the loss due to the failure of
the research projects and provide big reward
in the successful projects. Accordingly, it
is not beneficial for the progress of technology.
Therefore, harmonization should not only take
into account the enthusiasm of employee’s
invention but also the enthusiasm of research
investor.
In addition, it is not realistic to make
a complete harmonization of international
standards as the economic development level
is different among different countries and
the ensuing issues encountering each country
is different. For example, the active patent
system of China is the result of a combination
of a world active patent system and the fundamental
situation of China in its process of reform
and development. In the past twenty years,
huge changes have occurred in China and intellectual
property law has been founded and developed,
step by step, under such background. Contravention
reflected in the process of reform of the
economic system and the social requirements
have been embodied in the relative law. For
example, the service-related inventor could
become the patentee under the regulation of
contract. The measure would greatly improve
the enthusiasm of entities and scientific
researchers and develop the industrialized
course of patent technology once the regulation
has prescribed that a service-related inventor
would not only obtain a reward, but also has
remuneration.
Do the groups wish such harmonization to
be undertaken through labor law rules or through
rules of intellectual property law?
It is advisable to undertake such harmonization
through both labor law rules and intellectual
property law and this would enable the desired
benefit to obtain more complete and efficient
protection. Many companies would require the
employee to abandon some rights while signing
the employment contract and elude the obligation
prescribed in the intellectual property law
to award the employee the reward and remuneration
as the employee is not in a strong position
in the process of applying for a job. Some
small scale private companies would try their
best to remove the employee from the inventor
and creator and the employee dare not claim
under the pressure. It is difficult to obtain
evidence while the litigation is occurred.
It is necessary to prohibit that the employer
require the employee to give up some rights
when signing the employment contract.
2.2 As a general rule, is it the employer
who is to be the owner of the intellectual
property rights of creations made by employees
in the context of their employment contract
and in the performance of their tasks or,
on the contrary, is it the employee who must
conserve his rights, but with the possibility
for the employer to have them attributed to
it under certain conditions?
ANS: In our opinion, and from the actual
experience of practice, there is no big difference
between the two courses of action. For example,
the employer would require the employee to
transfer the ownership, although the employee
has the initial ownership. At this time, the
employee may require the employer to perform
the obligation prescribed in the employment
contract in order to protect his rights and
benefits before signing the assignment contract.
On the contrary, the dispute and problems
that the employee refuses to sign the assignment
contract would be less and the invention-creation
would be put into market sooner if the employer
has the initial ownership. However, it is
a disadvantage that the employee has difficulty
in protecting his rights and benefits.
In our view, international harmonization
should be conducted according to popular measure
used by most countries, namely the employers
have the ownership of invention and related
patents that were developed by their employees
during their employment contract. On one hand,
this would be easy for international harmonization
in order to make the time to amend the law
short for most of countries. On the other
hand, it would be convenient for the employer
(i.e. investor) to put the result into practice
sooner or put the result into the technology
trading market. Also it would be beneficial
for the employer to develop the technology
by increasing investment according to the
value of invention-creations.
2.3 If the employer was to be considered
as owner from the outset of the intellectual
property rights over creations made by employees,
do the groups think that the employee should
receive a particular reward, in addition to
his salary, for these creations, or do they
think that such a reward is not justified?
ANS: In our opinion, the international harmonization
should consider both enthusiasm of the employer,
who would like to invest in the research,
and the enthusiasm of the employee who made
the invention-creation. Namely the employer
will be able to obtain better benefits and
the employee will be more willing to make
invention-creation. It is common that the
enthusiasm of the employees of the government
(including public colleges and research institutions)
is not high. In our opinion, the amount and
ratio of remuneration given to an employee
of the government could be prescribed by each
country according to the factual situation
in order to improve the enthusiasm of such
employee. In the future, the state-owned entities
should have the same position with the non
state-owned entities. It is not necessary
to define the amount and ratio of additional
reward and remuneration if the issue to improve
the enthusiasm of government employees could
be resolved by strengthening the management
and competition and increasing wages.
However, it is not proper to prescribe the
particular amount and the obligation to award
the reward and remuneration is enough for
the non state-owned entities. It is better
to develop the labor law to protect the rights
and interest of non state-owned entities.
The reason the employer pays the salary to
the employee during the research development
period is the employer wishes the project
to bring him benefit and the risk of investment
for this research project by the employer
is huge. Most of the time, the risk and cost
of a particular research project is proportioned
by many projects. The enthusiasm would be
influenced seriously if the investor would
pay big remuneration in the successful project
while bear the loss of other project due to
research failure. It is not beneficial to
the progress of technology in general and
therefore it is not proper to prescribe the
ratio of remuneration.
For the employee, it is the deserved obligation
to perform research and development according
to the employment contract. The value of the
employee would depend on the benefit that
he has made for the employer and whether the
employee would obtain more benefit by changing
the employer or doing business by his own.
In a free market economy, the employer would
provide high wages in order to keep the valuable
researchers and award huge reward according
to the benefit of the research project. However,
the employer would always lack the enthusiasm
to provide employees with high wages in a
country with an undeveloped market of employees
and the employer does not have many choices
for employees. Therefore, the freedom of market
of employee should be developed at first by
making good labor laws in order to protect
the rights and interests of employees.
If, on the contrary, the employer is not
vested from the outset in the intellectual
property rights over creations made by employees,
what would be the conditions for the attribution
of these rights and, in particular, what could
the remuneration be, corresponding with the
possibility of having the intellectual property
rights in question attributed to the employer?
As a result of international harmonization,
employees would have ownership if the employer
does not obtain the ownership of the invention-creation
that the employee made during his execution
of the employment contract. In this regard,
the employer would require the employee to
transfer the intellectual property right through
an employment contract in order not to arise
confusion and a possible dispute. It is advisable
to uniformly prescribe the obligation that
the employer awards the employee remuneration
about and beyond regular wages. But it would
rest upon the decision of the employer, especially
a non state-owned enterprise, to decide the
particular amount of remuneration.
Do the groups consider that the adoption,
in principle, of a reward could have an influence
over the general system of intellectual property
rights and if so, what would that influence
be?
It would be of some influence to the whole
intellectual property system if the employer
is obliged to award the employee remuneration
above regular wages has been uniformly prescribed.
However, the influence is somewhat limited.
Some countries have prescribed the obligations
that employers award employees reasonable
remuneration. But it is difficult to define
how much remuneration is reasonable and the
employer and employee would have dispute in
respect of the issue. From the factual situation
of China, some non state-owned entities would
refuse to perform the obligation with the
reason being that the regular wages have included
the remuneration or just award a very little
reward and remuneration while some other non
state-owned entities would award a huge reward.
The factual reward would depend on the value
of the employee in the labor market and management’s
value of the employer. Therefore, whether
the additional remuneration would be awarded
would depend on the market itself.
2.4 The groups are also invited to give their
opinion on the organization of disputes concerning
the attribution of intellectual property rights
over employee’s creations and concerning their
use by employers.
Are the groups of the opinion that such disputes
should be governed by the courts which have
jurisdiction in labour law matters, or are
they more of the opinion that these disputes
should be subject to those courts which judge
intellectual property disputes?
If should be recalled that the disputes may
concern various aspects of relations between
employers and employees: attribution of ownership
of such rights; decisions concerning the means
of protection and, finally, any compensation
as may be due.
ANS: The dispute concerning the attribution
of intellectual property rights, the means
of protection and any compensation as may
be due should be governed by the courts that
judge intellectual property disputes.
2.5 The groups are also invited to give their
opinion on the existence of differences, if
any, between the status of private sector
employees and researchers in universities
and in research institutes that are financed
by public funds.
Are there any grounds for providing a difference
in treatment in the hypothesis of international
harmonization or, on the contrary, should
all employees and researchers be treated in
the same way?
ANS: Whether a different policy would be
used for the private sector and state-owned
entities would depend on the business efficiency
of the whole state-owned entity and the position
in the whole economy. In some countries, especially
countries in the process of economic change,
the state-owned entities have an important
role in the national economy. The quick development
of the whole society would be influenced if
the working efficiency of employees is not
high in the long period and the state-owned
entities lack efficient management and system
measures. At this time, it is required to
have different intellectual property policies
for the private sector and the state-owned
economy. For example, it could define the
amount of rewards and remuneration through
legal means to encourage the enthusiasm of
employees of state-owned entities and leave
the amount of the reward and remuneration
to the own decision of the private sector
in order to protect the enthusiasm of the
employer. In our opinion, the amount of reward
and remuneration of legal regulation should
be reasonable, or it would damage the benefit
of state-owned employer.
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