On December 11, 2023, the State Council announced the Decision of the State Council on Amending the Implementation Regulations for the Patent Law of the People’s Republic of China. The amended and revised Implementation Regulations for the Patent Law of the People’s Republic of China (“New Implementation Regulations”) will become effective on January 20, 2024. For enterprises, the New Implementation Regulations may increase the burden on enterprises in terms of rewards and remuneration for work-related inventions if enterprises have not yet formulated their own rules or entered into agreements with their employees. Details are as follows:
| _ | New Implementation Regulations | Implementation Regulations for the Patent Law of the People’s Republic of China (Effective as of February 1, 2010) |
Principle | Agreement takes priority Property rights incentives (equity, options, dividends, etc.) are encouraged | Agreement takes priority |
Reward | Invention patent: no less than RMB 4,000 Utility model patent: no less than RMB 1,500 Design patent: no less than RMB 1,500 | Invention patent: no less than RMB 3,000 Utility model patent: no less than RMB 1,000 Design patent: no less than RMB 1,000 |
Remuneration | “In accordance with the provisions of the Law of the People's Republic of China on Promoting the Transformation of Scientific and Technological Achievements”, i.e: Transfer/License: no less than 50% of the net revenue of transfer or license Investment: no less than 50% of the shares or capital contribution invested by scientific and technological achievements Self-implementation or implementation by cooperation with others: no less than 5% of operating profits for the consecutive 3 to 5 years upon successful production | Invention/Utility model patent: no less than 2% of the business profits from implementation of the said invention or utility model patent annually Design patent: no less than 0.2% of the business profits from implementation of the said design patent annually (alternatively, a one-off remuneration referring to the aforesaid percentage) License: no less than 10% of the royalties |
“Work-related invention” and “work-related scientific and technological achievement” have different definitions under current Chinese laws but the two concepts have overlapping content which leads to the controversy about whether the provisions of the Law of the People’s Republic of China on Promoting the Transformation of Scientific and Technological Achievements may apply to the reward and remuneration of work-related inventions. The New Implementation Regulations unifies the controversy and increases the statutory reward standard at the same time. For enterprises, if the enterprise already has internal rules for work-related invention reward and remuneration or corresponding agreements, the New Implementation Regulations will not have a substantial impact; on the contrary, for enterprises that have not yet formulated corresponding internal rules or relevant agreements, it is recommended to fill this gap as soon as possible, otherwise, they may have to pay high fees to employees for work-related inventions in the future based on statutory standards.