Departing employees: who owns the invention?

According to the law, inventions or creations made by departed employees within one year of leaving can be recognised as service inventions – if they are related to either their former job responsibilities or their former employer’s tasks. However, companies often struggle to clearly judge whether they should claim their rights and how to gather evidence in the face of patent applications by former workers.

Determining correlation

In several patent ownership disputes, the Supreme People’s Court has maintained a consistent stance that the key factor is a correlation between the technical field of the disputed invention or creation and the work tasks or responsibilities assigned by the former employer.

This factor may be used to determine whether an invention or creation qualifies as a service invention made in the execution of the tasks of the former employer. In other words, patent ownership hinges on the correlation between the invention or creation and the job tasks the former employee carried out for the former employer.

This standard for correlation differs from the approach used in patent infringement cases, as it doesn’t require a direct comparison between the technology covered by the patent application and the technology used by the former employer. There is no need to identify their identical nature.

Current judicial practice is guided by the principle of safeguarding the former employer’s legitimate rights and interests while also encouraging and supporting innovation and development. It is essential to avoid overly broad interpretations of inventions or creations that inappropriately restrict the normal movement of research and development (R&D) personnel and the pursuit of new technological advancements.

Evidence strategy

Companies should consider several avenues for gathering and presenting evidence.

First and foremost, a former employer must submit proof demonstrating the responsibilities or tasks that they entrusted to their departed employee. This evidence should encompass details such as job duties, level of authority, and their access to, control over, or knowledge of the technical information relevant to the disputed patent.

The crux of presenting evidence lies in demonstrating that a departed employee’s job responsibilities or tasks were connected to R&D, or that they possessed the authority or significant possibility to access pertinent technical data.

For instance, in Shenzhen Weibond Technology v Li Jianyi and Shenzhen Remote Intelligent Equipment (2019), although the departed employee held the position of production and manufacturing director, the former employer provided evidence such as the employee’s signatures on technical drawings, procurement request forms for R&D, and emails and meeting minutes from their participation in R&D discussions. This evidence played a pivotal role in the court’s ultimate determination of whether the invention constituted a service invention.

Furthermore, a former employer must present evidence specifically outlining the connection between the disputed patent’s content and their former employee’s job tasks, clearly defining the relevant technical field. It is crucial to have evidence demonstrating that a departed employee’s job responsibilities or assigned tasks at the former employer directly aligned with the specific product related to the patent.

Importantly, one should avoid stretching the interpretation of the technical field too broadly. For instance, in Zhejiang Chunfeng Power v Segway (2022), a departed employee’s primary role and job responsibilities centred around overall vehicle R&D and did not involve air filters.

The plaintiff argued that air filter development was part of the automotive R&D on the grounds that both belonged to the same technical field. However, the court held that it was not appropriate to expand the technical field of a specific automotive component into the broader automotive field.

Third, it is essential to submit evidence that:

• Provides a detailed analysis of how the disputed patent invention’s substantive characteristics or improvement concepts are reflected in the technical solutions of the former employer; and
• Explains the continuity or inheritance relationship between the two technical approaches, based on technical concepts and themes.

For example, in Tianjin Nankai University Castor Engineering Technology v Zhang Min (2011), the court acknowledged that although the patent applied for by a departed employee involved a method for producing sebacic acid with a dilution process – which differed from the microwave method they had used in the former job – both methods were parts of the experimentation of adopting castor oil-based compound methods to extract sebacic acid. The objective in both cases was to extract sebacic acid from castor oil, indicating a continuity of effort.

Fourth, it is crucial to provide relevant evidence concerning the necessary conditions for completing the invention or creation. This is required to demonstrate that the departed employee or the new employer lacked the requisite knowledge, experience, skills, or material and technical resources to complete the invention or creation, which are products of intricate intellectual labour that often require substantial investments in terms of funding, technology and research personnel.

Therefore, the parties asserting their rights should offer reasonable explanations regarding the technical research process or technology sources.

Recommendations

When companies handle employee departures, they should pay close attention to patent applications filed within the next year. A comprehensive assessment should be conducted to determine the necessity of pursuing legal action.

On the recruitment side of the same equation, when companies hire recently departed employees from other organisations, it is advisable to thoroughly understand their prior roles and specific job responsibilities. It is essential to keep any patent applications submitted by these employees during their first year of employment separate from their previous work to minimise the risk of patent ownership disputes.

Chen Jian is a managing partner at Wan Rui Law Firm. Wan Rui Law Firm is a member of Sanyou IP Group