Separate management of service works and service inventions

By Han Yufeng and Lu Lei, Rui Bai Law Firm
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Notwithstanding the fact that service works and service inventions fall within the scope of intellectual property (IP), they each have their own specific features in terms of definition, judgment criteria, vesting of rights, author and inventor rights, etc. Enterprises need to manage them separately on the basis of an understanding and clarification of their basic content in the various arrangements for IP transactions, licensing and commercial use, as well as employment contracts that have a connection.

The legal provisions on service works are mainly found in the Copyright Law, whereas those on service inventions are in the Patent Law. This column examines the relevant provisions of the current laws.

Han Yufeng Counsel Rui Bai Law Firm
Han Yufeng
Counsel
Rui Bai Law Firm

Definitions and judgment criteria. A service work means “a work created by a citizen in order to accomplish a task assigned to him or her by a legal person or other organization”. For example, a film script, film or television series, novel, artwork, video work, software, etc., created by an employee as assigned by his or her employer all fall within this category. Service works are further divided into “general service works” and “special service works”. The latter mainly refer to project design drawings, product design drawings, maps, computer software, etc., created using the legal person’s (or other organization’s) material and technical resources, and in respect of which the legal person (or other organization) bears liability, or another work in which a legal person (or other organization) enjoys the copyrights as specified in laws or administrative regulations, or as specified in a contract. A service invention or creation means “an invention or creation completed in executing a task of one’s employer or mainly by using the material and technical resources of one’s employer”.

From a comparison it can be seen that the definition and criteria for determining a general service work are “to accomplish a task assigned by a legal person or other organization”. The determination of a special service work, such as project drawings, etc., requires three conditions: “to accomplish a task assigned by a legal person or other organization”; “mainly using the material and technical resources of the legal person or other organization”; and “the legal person or other organization bears liability in respect thereof”, none of which may be absent. As for a service invention, “completed in executing a task of one’s employer” or “mainly using the material and technical resources of one’s employer” are key conditions, and if either are satisfied an invention may be deemed a service invention.

Vesting of rights. Both service works and service inventions observe the principle of “priority of agreement”, meaning that if provisions pertaining to title to the rights exist, such provisions are to be complied with (except if such provisions are invalid or revocable). However, disputes relating to title to the rights usually occur when there is no express agreement. Where there is no agreement between the author and the legal person (or other organization), a general service work vests in the author, whereas the copyrights in a special service work vest in the legal person (or other organization). In practice, the issue of title to a general service work is one of the areas in which service work disputes often arise.

In contrast, the right to file for a patent for a service invention vests in the legal person (or other organization); and once the application is approved, the legal person (or other organization) becomes the patent holder. In other words, where there is no agreement, the right to file for a patent for, and the patent rights in, a service invention both vest in the legal person (or other organization).

Right to remuneration. The inventor of a service invention has a statutory right to receive remuneration, namely “the entity that has been granted patent rights must reward the inventor or designer of the service invention. After the invention patent has been exploited, the entity must give the inventor or designer reasonable remuneration based on the scope of propagation and application of the patent, and the economic benefits derived”.

In contrast, the author of a service work has no such statutory right to receive remuneration. Even with respect to special service works, the law only provides that the legal person (or other organization) may give the author a reward.

Lu Lei Counsel Rui Bai Law Firm
Lu Lei
Counsel
Rui Bai Law Firm

Exploitation of rights and restrictions. With respect to general service works, where the copyrights vest in the author, the legal person (or other organization) has a preemptive right to their use within its scope of business. Furthermore, without the consent of his or her employer, the author of a work may not, within the first two years after completion of the work, license a third party to use the same in a manner identical to that of his or her employer.

However, as for service inventions and special service works, since the rights vest in the legal person (or other organization), their exploitation does not require the consent of the author or inventor.

MANAGEMENT BY TYPE

Based on the above-mentioned comparisons it can be seen that, although both service works and service inventions are connected with the tasks of the legal person (or other organization), they each have their own particular features, so the authors recommend that enterprises manage them separately. For example, with respect to service works, duly carry out such legal procedures as registration, stipulation of title, etc. With respect to service inventions, carry out routine and periodic patent mining and patent filing work, so as to avoid valuable inventions entering the public domain due to a failure to file, and avoid the inventor himself or herself filing for a patent, harming the lawful interests of the enterprise, and spawning future disputes.

In light of the authors’ practice experience, current legal systems still harbour some ambiguities. One thing worth celebrating is that the Copyright Law (Revised Draft Sent for Review) published in 2014, and the Patent Law Revised Draft (Sent for Review) published in 2015, contain revised provisions on service works and service inventions, respectively, which indicates that relevant issues have drawn the attention of the legislative authorities.

Han Yufeng and Lu Lei are counsel at Rui Bai Law Firm

Rui Bai Law Firm

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