The Intellectual Property Tribunal of Shanghai Municipal Higher People’s Court formulated the Guideline for Hearing Disputes Arising from Reward or Compensation to Inventors or Designers of Service Inventions (“Guideline”)

Guideline was formulated at the end of June 2013, for reference by courts in Shanghai in hearing relevant cases. The following provisions stipulated in Guideline are very important for enterprises practically:

Guideline has stated that the agreement between the unit and the inventor shall be prior to the statutory standard, and the standard listed in the agreement can be lower than the statutory standard. In order to avoid the direct application of statutory standard, enterprises shall add the relevant issues into their rules and regulations, or stipulate in the labor contract.

According to “Guide” Article V, Article VI, the court may check the agreement on the 2 aspects, which are the form and content.

Legitimate form. The forms of agreement include: (a) an agreement between the unit and the inventor ;( b) the unit stipulates the standard in the rules and regulations. The first form will be reviewed for its effect in accordance with Contract Law, and Labor Contract Law, such as whether it belongs to the circumstance of amendment or cancellation; the second form will be reviewed for its legitimate procedures in accordance with Company Law, and Labor Contract Law, such as whether the unit has handle the democratic negotiation and publish procedures accordingly.

Legitimate content. Guideline has stated that the authorities shall respect the Management Autonomy of the unit, respect the party autonomy of the parties, generally, if the parties make the agreement in accordance with the legitimate procedures, the relevant standards are reasonable, but the extremely low standard agreed by the parties shall be deemed as unreasonable, the court shall determine a reasonable standard based on the individual case. Shanghai Municipal Higher People’s Court states when the parties agreed on an extremely low standard, since there is an agreement, the court shall determine the standard instead of directly apply the statutory standard.

In addition, Guideline has mentioned that the ownership of patent right shall be decided based on the completion location of the patent, which is also instructive for enterprises.