‘Law of the People’s Republic of China on Promoting the Transformation of Scientific and Technological Achievements’ (‘Amendment’) will come into force on October 1, 2015

The ‘Amendment’ was adopted at the Meeting of the Standing Committee of the National People’s Congress of the People’s Republic of China on August 29, 2015. There are several articles shall be paid attention to.

Agreement shall prevail, but there is a special occasion

Like the ‘Patent Law’, the ‘Amendment’ has prescribed that the agreement on the reward and remuneration shall prevail. However, for those R&D institutions that are set up by the State, colleges and universities, the standard for the reward and remuneration shall be no less than the statutory minimum standard as prescribed in the ‘Amendment’.

The statutory minimum standard for the reward and remuneration

The ‘Amendment’ has not distinguished the reward from the remuneration, but it has prescribed the statutory minimum standard as follows:

While the achievement is transferred or granted to another party, the standard shall be no less than 50% of the annual after-tax profit.

While the achievement is invested, the standard shall be no less than 50% of the equity or the investment rate.

While the achievement is adopted in production, the standard shall be no less than 5% of the operation profit for 3 to 5 years running.

The above prescription is quite different from those as stipulated in ‘Patent Law’, because ‘Patent Law’ has prescribed the reward and remuneration separately. In addition, the minimum standard for the remuneration is 10% of the license fee and 2% of the operation profit for the valid period of the patent (0.2% for the utility model patent). In view of the difference between the ‘Amendment’ and the ‘Patent Law’, which statutory minimum standard for the reward and remuneration shall prevail while there is no agreement between the parties, would become a problem in the juridical practice in the future. For a company, it would be better to design a reasonable reward and remuneration regulation to eliminate such risk.