Stay up to speed on compliance measures of corporate IP ownership

Intellectual property (IP) ownership is the fundamental principle for IP. We need to first clarify and identify the ownership of IP before we can reasonably distribute benefits between the inventor and the rights holders. On the issues of IP ownership, how to co-ordinate the interests among the employees as the inventor, and the enterprise as the rights holder, is important to keep employees motivated to create and encourage the enterprises to keep innovating in accumulating intellectual properties.

Ownership disputes

The author recently handled a case of patent disputes. The plaintiff is the employer and the defendant is a former employee of that corporate. Because that employee was in some conflicts with the employer, he decided to apply for a patent for the technological product he created during his employment at the corporate before the termination of his employment. The employee changed the bibliography for the patent and transferred the patent to be under the name of his father (second defendant) to evade the plaintiff’s investigation.

Our law firm represented the plaintiff and collected the employment contract, as well as the name card of the first defendant, to prove that an employment relationship existed between the plaintiff and the first defendant. We also collected the meeting minutes in which the defendant participated and signed his attendance to prove that the patent which the defendant applied is related to his post at the corporate.

We also submitted the relevant documents of the employee in changing the bibliography of the patent to prove the transfer of the concerned patent. In addition, our firm handled the relevant termination procedures with the State Intellectual Property Office to prevent the concerned patent from being abandoned or transferred by the defendants. In the end, the ruling for the case was satisfactory.

As the current Patent Law in regulating on-duty inventions tends to incline towards the employers, and the patent in this case was created by the employee out of a responsibility to execute a task for the employer, we therefore could assist the employer to resolve the dispute.

Law amendment

However, the latest amendments in patent law may change these circumstances. According to article 6 of the Fourth Amended Draft for the Patent Law (Manuscript), IP treated as a fulfilment to execute the tasks by an employer would be categorized as an on-duty invention. The rights to apply for patent for on-duty IP belong to the employer. After the application is approved, that employer would become the rights holder of the patent. For patents that are not on-duty IP, the rights to apply for patents belong to the inventors or designers. After the patent application is approved, that inventor or the designer would become the patent rights holder.

In utilizing the material technology of the corporate to finish the creation of the IP, the employer and the inventor or designer have set up an agreement to bound the rights and ownership of the patent and should follow this agreement; for those without such an agreement, the rights to apply for patents belong to the inventors or designers.

The most important changes to article 6 in regulating on-duty inventions redefines the ownership of the patents created with the help of material technology provided by the corporate. From this, we can see that, in order to encourage the scientists of the corporates to innovate and create, this change of regulation is already starting to incline towards the inventors.

Recommended compliance

Therefore, to prevent the improper damage potentially done to the invention or technology of the corporate, the author recommends that corporates establish the following compliance measures.

First, pay close attention to the progress of patent law revision. The amendment to the draft has clearly defined the ownership of invention created with the help of material technology of the corporates. Therefore, from the perspective of compliance, the corporate should amend and renew the definition of ownership of invention, which has been created with the help of material technology provided by the corporate, with its employees in advance to prevent the loss of corporate IP.

The corporate should also state in advance and define the product of research and development under the ownership of the corporate in the employment contract and sign the relevant confidentiality agreements.

When researching and developing the products, the corporate should set up a complete and complementary compliance system to monitor and record the details of the research and development of the products, for example, to regulate and maintain the records of the responsibilities of the relevant staff, meeting minutes and messages, etc.

The corporate should also handle the relevant information and product of the research and development with confidentiality. For example, it should define categories of confidentiality and set up the complementary confidentiality procedures to determine the confidentiality procedures that need to be taken in handling the copy, external and internal dissemination and delivery of information accordingly.

Before initiating new research projects or developing other inventions, the corporate should have a comprehensive analysis of the foreseeable IP and its background, and organize and define this ownership to prevent potential disputes from arising in claiming IP ownership.

Finally, when employees privately or illegally utilize on-duty inventions, corporates should immediately communicate with the employees to resolve disputes. If resolution of disputes cannot be achieved through communication, then the corporate should promptly take appropriate legal action to prevent the loss of its IP or relevant trade secrets.

It is imperative to stay abreast of the amendments to corporate IP ownership. Work done for the ownership of IP continues to refine and strengthen, and corporates need to better and effectively handle and utilize their edge in IP to avoid issues of IP ownership from hindering development.