China: Invention for hire in PRC: what should practitioners know?

Last Updated: 20 July 2015
Article by Ou Xiuping, Xu Jing and Yin Ji

The legal framework of service invention is stipulated by the PRC Patent Law and the Regulation on Protection of New Varieties of Plants. Also in April 2015, the State Council solicited public opinion of the Regulations on Service Invention (Draft), which has been amended for the fourth time1. This article will closely study and analyse hot-spot issues in PRC legal practice with respect to disputes over service invention on the case study, including:

  • Subjects and conditions when compensating;
  • Agreement priority principle;
  • Determination upon the amount of rewards and compensation;
  • Limitation of action.

We firstly introduce subjects and requirements when compensating inventors in this section.

The subject and requirements when compensating inventors

  1. Subject of right: inventor

Only are the inventors or designers of the service invention, pursuant to Article 16 of the Patent Law, entitled to the compensation or rewards. Article 13 of the Implement Regulations of Patent Law further states that:

"'Inventor' or 'designer' as mentioned in the Patent Law means any person who has made creative contributions to the substantial features of the invention. Any person who, in the process of accomplishing the invention, is responsible only for organizational work, or who offers facilities for the use of material resources, or who takes part in other auxiliary functions, shall not be an inventor or designer."

Therefore, an inventor shall be the one "made substantial contributions to the substantive features of the invention". Besides, only an individual person, neither a company nor entity, can be an inventor.

In practice, a company usually refuses to pay compensation to its employee arguing that the person failed to make substantial contribution to the invention. But how could we define "making creative contributions to the substantial features of the invention"? Substantial features are originated from the Patent Law2. Likewise, it can be referred to the provisions in the Implement Regulations of Patent Law and Guidelines for Examination to determine the ownership right of the inventor. This approach not only is consistent with the legislation intention, but also able to determine who is inventor based upon the quality and size of objective contribution, which tends to be fair.

However it is rather difficult to clarify who and to what extent he contributed to the invention in practice. Therefore, the courts always perform a simple presumption rule, whether the employee's name shown in the patent documents' corresponding column of the inventor, when they need to identify who is the inventor. For instance, Beijing secondary intermediate people's court stated in the Zhang Zhili v. HuaXia Julong Company that "the patents' inventor column in all six documents showed that Zhang Jianjun, Zhang Jianguo or other inventors except Zhang Zhili were the inventors, thus this court held that all persons appeared on the inventor column of the patent document shall be deemed as the inventors of these 8 subjected patents.3" It is rely on the record of the patent document. Generally, the authenticity of this record shall be recognized and the inventor listed on the document shall be deemed as the actual inventor. However, the presumption is of uncertainty, thus it is allowed to present counter-evidence to overrule this presumption. Provided there are counter-evidences overruling the authenticity of the record in the patent document, the owner of the patent shall be the actual inventor instead of the one recording in the patent document.

  1. Subject of obligation: the company granted a patent

Article 74 of Detailed Rules for the Implementation of the Patent Law (2002) provides that "The state-owned-enterprise (SOEs) or institution that a patent is granted shall, within three months from the date of the announcement of the grant of the patent, give compensation to the inventor or creator of a service invention." This provision shrinks the application scope of the compensation system to SOEs, which was unfavorable to the inventors or designers of the service invention. Yet in 2010 amendment cancelled the restriction over the SOE. The suitable subject is redefined as "the company that is granted a patent". So "the company that is granted a patent" is the obligation subject of the compensation for the invention.

From the legislative perspective, "the company that is granted a patent" has no ambiguity. However, it doesn't conform to the legislation original purpose if "the company that is granted a patent" is merely interpreted as "the patentee written on the patent certificate". For example, the company does not file the patent by itself but assign this right to someone else. In this case, the law does not provide how to determine the obligation subject of compensation. The standard in judicial practice varies as well. In the case Wei Qingfu pl. v. China Aerospace Science & Industry Corp., Beijing First Intermediate People's Court held that:

According to the interpretation of literal doctrines, the term 'the company that is granted a patent' should be 'the initial licensed patentee'. According to the interpretation of legislation doctrines, employees should receive compensation from their employer. Other patent owners and practitioners such as patent assignee or licensee do not have employment relationship with the service inventors or designers, so they do not have to fulfill corresponding obligations4.

In the case Zhang Weifeng v. 3M China Limited, the patent was not filed by the employer of the plaintiff (3M China Limited) or employer of three other inventors (3M Company), but was filed by the defendant 3M Innovation Company and then was granted by the administration. The court held in the final instance:

Service inventors or designers can get compensation not only from the patent royalty received by the company that is granted a patent, but also from the profit received from assignment of the patent right (including assignment of the patent filing right and then the patent gets licensed). ... 3M Company, 3M China Limited, 3M Innovation Company are affiliated company, 3M Company should had been entitled with this patent filing right, but this right was assigned to 3M innovation company because of 3M company's management mode of intellectual property. According to the provision of compensation, its original legislative purpose is to ensure that the inventors or designers receive deserved compensation for their work. This right should not be impaired by the agreement between the multi-national corporates. Therefore, even 3M China Limited is not the patentee of involved invention, they still should give Zhang Weifeng compensation for his service invention.5

What we say: when determining the obligation subject of compensation for service inventions, the existence of the employment relationship between the company and the service inventors or designers shall be initially considered. This is the necessary and sufficient condition in determining who is obligated to compensate the service inventors or designers. If there is no employment relationship, there is not sufficient condition for payment of the service invention compensation. Secondly, the patent granting does not change the employment relationship between the inventors or designers and its employer, and the obligation. The owner of patent right written on the patent document should not be considered as the obligation subject. Usually, the company that is granted a patent is the employer of the service inventors or designers. In this condition it is not controversial that the company should give the inventors or designers compensation. But in some condition, the employer does not file the patent itself instead assign this right to someone else. In this case the company that is granted a patent is not the employer company of the inventors or designers. If the obligation subject of giving compensation is restricted to "the company that is granted a patent", the employer company is not the obligation subject. The company to which the patent belongs could defend itself for not giving compensation by using the nonexistence of employment relationship as an excuse. This makes the inventors or designers unable to receive deserved compensation from both sides. In this case the provision of service invention compensation would be a dead letter. Therefore, we hold the opinion that as long as there is employment relationship between the inventors or designers and the company, the company cannot exempt itself from giving the inventors or designers the compensation, regardless of the owner of the patent or the patent filing right.

  1. Substantive conditions of object: service invention accomplished in PRC

According to Article 16 of the Patent Law, the precondition for requesting compensation is that the invention is a service invention, provided in Article 12 of Detailed Rules for the Implementation of the Patent Law:

  1. in the course of performing his own duty;
  2. in execution of any task, other than his own duty, which was delivered to him by the company to which he belongs;
  3. within 1 year of his retirement, removal from office, or termination of the employee or personnel relationship, provided that the invention relates to his own duty in the company where he worked or relates to a task assigned to him by the company.

Yet the Patent Law has no specific provision for the object of Service Inventions. However, Article 4 of Regulation on Service Inventions (Draft for Comment) provides: "The 'inventions' as used in this law means intellectual creation accomplished within the People's Republic of China which includes patents, new varieties of plants and layout designs of integrated circuits." This provision means that objects of compensation system includes not only patent, but also new varieties of plants and layout designs of integrated circuits.

As to the specific object of service inventions-creation, no definition explicitly is provided in the Patent Law or relevant judicial interpretation.

What does "service invention" mean exactly? To answer this, we have to study the nature of compensation dispute of Service Inventions and applicable law. Regardless of the nationality of the inventors or designers, the country in which the service invention is completed and the nation that grants the patent, the compensation dispute of invention is contract dispute between employer and employee. Therefore, first we should determine the jurisdiction and applicable law before we determine the object of service invention in Article 16 of patent law with applicable provisions. As is provided in Article 265 of Civil Procedure Law,

Where an action is filed against a defendant which has no domicile within the territory of the People's Republic of China for a contract dispute or any other property right or interest dispute, if the contract is signed or performed within the territory of the People's Republic of China, the subject matter of action is located within the territory of the People's Republic of China, the defendant has any impoundable property within the territory of the People's Republic of China, or the defendant has any representative office within the territory of the People's Republic of China, the people's court at the place where the contract is signed or performed, where the subject matter of action is located, where the impoundable property is located, where the tort occurs or where the domicile of the representative office is located may have jurisdiction over the action.

Thus it can be seen that the legal basis of determining jurisdiction of compensation dispute of a service invention should be the Doctrine of the Most Significant Relationship6 in international private law.

Article 41 of Law of the People's Republic of China on Application of Law in Foreign-related Civil Relations provides: "The parties concerned may choose the laws applicable to contracts by agreement. If the parties do not choose, the laws at the habitual residence of the party whose fulfillment of obligations can best reflect the characteristics of this contract or other laws which have the most significant relation with this contract shall apply." Therefore, in a compensation dispute of a service invention, if the parties did not choose, the applicable law should relate the most significantly to the contract. The place of performance of the service invention has the most significant contact with the contract without doubt. The place of performance of the service invention is the place where the service invention is accomplished. PRC courts have jurisdiction over such compensation disputes. PRC laws should be applicable to such disputes as well. The core of controversy over such dispute is whether the employers should pay rewards and compensation to the employees. The place where the patent is filed or granted is not closely relevant to affirmation the employment relationship between two parties. Besides, as to whether an invention belongs to service invention, rules may vary in different jurisdiction.

It can be seen from the above analysis that although PRC Patent Law has no clear definition over service invention, however its intentional meaning should be service invention that was accomplished in China. Specifically, it includes patents invented and filed in China and patents invented in China but filed abroad. In other words, as long as the invention is accomplished in China, the PRC compensation system of service invention should be applied wherever the patent is filed. Japanese courts hold the same opinion. In the Hitachi case, besides Japan, the involved service invention is granted a patent in USA, England, France, Netherland and Canada. In its second instance, the Tokyo High Court held that the right to apply a patent (or the patent right) consists of both right obtained domestically and right obtained abroad. In the final instance, the Japanese Supreme Court held: the inventor of such service invention described in Patent Law has the right to claim for the profit gained abroad by the employer which means the inventor or designer can request for compensation.


1Its first version was issued in August 2012, which was followed by the Draft of November 2012, December 2013, and April 2015 the last version.

2 Article 22 (3) of the Patent Law states that "inventiveness means [...] the invention has prominent substantive features and represents a notable progress..." which share the same implication herein.

3 Zhang Zhili v. HuaXia Julong Company on service invention compensation dispute, Beijing Second Intermediate People's Court, Case No.: (2014) ER ZHONG MIN CHU ZI No.05591.

4 Wei Qingfu pl. v. China Aerospace Science & Industry Corp. on service invention compensation dispute, Beijing First Intermediate People's Court, Case No.: (2013) YI ZHONG MIN CHU ZI No.9621.

5 Zhang Weifeng v. 3M China Ltd. on service invention compensation dispute, Shanghai Higher People's Court, Case No.: (2014) HU GAO MIN SAN (ZHI) ZHONG ZI No.120.

6 Here the most significant relationship refers to the place where the contract is signed or performed, where the subject matter of action is located, where the impoundable property is located, where the tort occurs or where the domicile of the representative office is located, instead of the nationality of the inventors or designers, the place where the patent is applied for or where the patent is granted.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.