Statutory clause governing the right to apply for a patent and the subsequent ownership of patent rights when an invention involves multiple parties or service inventions. This article is a fundamental piece of the legal framework for research and development in China, as it provides the rules for deciding who controls a new technology. Under the PRC Patent Law Article 15, the entity that employs an inventor is the rightful owner of a “service invention-creation” made in the course of performing their duties.
It also sets the rules for how co-owners of a patent can exercise their rights if there is no agreement between them. The law aims to encourage investment in innovation by ensuring that companies can protect the inventions they fund while also requiring that the actual inventors receive credit. This provision stops applying when an invention is made by an individual entirely on their own time and without using any of their employer’s material or technical resources.
Eligibility to file for a patent depends on the legal relationship between the person who conceived the idea and the entity that provided the environment for its realization. The PRC Patent Law Article 15 establishes that for inventions made as part of a work assignment, the right to apply for the patent belongs to the employer. This includes tasks specifically assigned by the company or inventions that result from the employee’s designated job function.
Once the patent is granted, the employer becomes the patentee and holds all the economic and legal powers associated with the right. The individual inventor, however, has the right to be named as the inventor in the patent documents. This recognition is a moral right that reflects the personal creative contribution of the individual.
Failure to correctly identify the owner or the inventor during the application process can lead to future legal challenges regarding the patent’s validity.
Financial compensation for the inventor is a mandatory requirement that accompanies the employer’s ownership of the patent. The PRC Patent Law Article 15 links the right of ownership to an obligation to provide a “reasonable reward” and remuneration to the creator. This ensures that the individual benefits from the commercial success of their invention, even if they do not own the patent itself.
The reward is typically a one-time payment made when the patent is granted, while remuneration is an ongoing share of the profits or licensing fees generated by the technology. If the employer and inventor have not agreed on a specific amount, the law provides default rates that must be paid. This system is designed to motivate employees to share their innovations with their employers rather than keeping them secret or taking them to a competitor.
The duty to reward persists even after the employee has left the company, provided the invention was made during their tenure.
Management of a patent by multiple parties requires a clear set of rules for usage and licensing in the absence of a private contract. The PRC Patent Law Article 15 allows any co-owner to exploit the patent themselves or grant a non-exclusive license to others without the consent of the other owners. However, any royalties collected from such a license must be shared among all the co-owners according to their respective interests.
This default rule prevents one owner from blocking the commercialization of the technology while ensuring that everyone receives their fair share of the financial benefits. For any exclusive licensing or the full transfer of the patent, all co-owners must give their unanimous consent. This protects each party from having their rights diluted or sold without their permission.
Most sophisticated companies choose to sign a detailed co-ownership agreement to avoid the limitations of these default rules. The final ownership structure of a patent is a key asset that determines a company’s value and competitive advantage. Article 15 remains the primary reference for resolving disputes over the origins of a new technology.
Cross-border IP assignments in China EOR contracts fail without direct tripartite agreements, explicit statutory reward breakdowns, and MOFCOM technology export filings.
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