Providing legal consulting for the introduction of the Job Compensation System under the Invention Promotion Act.

Law firm Veat provided legal consulting services to Company A (hereinafter “client”), newly establishing a Korean corporation, regarding the introduction of an employee invention compensation system.

The client requested consulting on legal risks that could arise in the process of assigning patent rights and other rights invented by the company's employees and executives to the company.

Law firm Veat’s Startup Consulting Team explained that in the absence of an assignment agreement or an employee invention system, the company could only have a right of ordinary use (통상사용권) for the employee invention, and advised the client on the need to introduce an appropriate system to protect the company’s rights.

Law firm Veat’s Startup Consulting Team guided the client on the method of assigning the rights of inventors or creators for patents, designs, and utility models that require registration according to the "Patent Promotion Act." The first is to introduce an employee invention system according to the "Patent Promotion Act," and the second is to enter into an assignment agreement individually with each employee. Law firm Veat’s Startup Consulting Team provided detailed legal advice to enable the client to choose the method suitable for them.

Furthermore, Law firm Veat’s Startup Consulting Team reviewed the standard employee compensation regulations necessary for the implementation of the employee invention system and provided them to the client.

What is an employee invention compensation system?

 

① When an employee receives a patent, utility model registration, or design registration (hereinafter referred to as "patent etc."), or has the right to receive a patent etc., the user etc. shall have the right of ordinary use (通常實施權) for the patent etc. However, if the user etc. is not a small or medium-sized enterprise according to Article 19 of the "Small and Medium Enterprise Basic Act," it shall not be the case unless it enters into or drafts a contract or working rules that are one of the following items after consulting with the employee, etc.
1. A contract or working rules that assign the right to receive a patent etc. or the patent right etc. to the user etc. for employee inventions.
2. A contract or working rules that provide for the setting of an exclusive right to use for the user etc. for employee inventions (Article 10 of the "Patent Promotion Act").

The employee invention compensation system is a system in which a company owns a patent for an invention made by an employee in relation to their work and provides fair compensation to the employee who is the inventor. Separate provisions regarding individual assignment agreements with employees are included as a proviso. The employee invention compensation system is detailed from Article 10 to Article 19 of the "Patent Promotion Act."

① An employee may assign the right to receive a patent etc. or the patent right etc. to the user etc. by contract or working rules, or may provide for the setting of an exclusive right to use, and shall have the right to receive fair compensation.
② The user etc. shall draft compensation regulations specifying the criteria for determining the form and amount of compensation according to Article 1 of the preceding article, and inform the employee etc. in writing.
③ The user etc. shall consult with the employee etc. regarding the drafting or amendment of the compensation regulations according to Article 2 of the preceding article. However, when the application of the contract or regulations is amended in a way that is disadvantageous to the employee etc., the consent of the majority of employees etc. who are subject to the contract or regulations shall be obtained.
④ The user etc. shall inform the employee etc. who receives compensation according to Article 1 of the preceding article of the specific details of the compensation, such as the amount of compensation determined according to the compensation regulations according to Article 2 of the preceding article, in writing.
⑤ Matters necessary for the scope, procedures, etc. for the employee etc. who must consult or obtain consent according to Article 3 of the preceding article shall be determined by enforcement decree.

…(“Patent Promotion Act” Article 15)

Compensation for employee inventions encourages invention activities and leads to the creation of excellent patents. Through the employee invention compensation system, it contributes to strengthening the company’s technological competitiveness and increasing profits, and the introduction of an employee invention compensation system is essential for enhancing the company’s innovation and competitiveness.

There is an Excellent Employee Invention Compensation Enterprise Certification System operated by the state to certify small and medium-sized enterprises that prepare and faithfully implement employee compensation regulations and to provide incentives such as priority examination for certified patents, partial exemption from registration fees in the 4th to 6th year, and participation points in government-supported projects. It is necessary to examine this carefully.

For startups, such professional support, especially in terms of invention and intellectual property management, is an essential element to promote the company’s growth and innovation.

Law firm Veat’s Startup Consulting Team is supporting companies to efficiently introduce and operate employee invention systems and contributing to the company’s innovation and growth.

Companies that need legal advice regarding the introduction of employee invention compensation systems are requested to contact Law firm Veat for professional support, and if you are considering a regular legal consultation system as a trusted corporate partner, please contact Law firm Veat.

Thank you.

Law firm Veat