Determining actual inventor in ex-employee disputes

Service invention-creations relating to departed employees are determined under the Detailed Rules for the Implementation of the Patent Law to maintain the former employer’s legal rights to scientific and technological achievements while encouraging and supporting innovation-driven development – stipulating that “inventions made by departed employees within one year after retirement transfer from the former employer or termination of labour or employment relations, if related to the work undertaken for the former employer or the tasks assigned by the former employer” shall be service inventions.

However, in practice, departed employees often make patent applications in the name of another person to circumvent the legal constraint of this clause – causing difficulties to the former employers in claiming ownership of service inventions and patents.

In this article the author analyses the current legal provisions, discusses ways to identify actual inventors based on judicial practice, and concludes with specific suggestions.

Current status

According to article 13 of the rules: “An inventor or designer, as referred to in the Patent Law, is a person who makes creative contributions to the substantive features of an invention.” In this regard, the party claiming to be the actual inventor needs to prove it made creative contributions to substantive features of the invention.

In determining actual inventors, consideration should be given to whether the right holder or inventor can reasonably explain the R&D process or technology source of the patent involved – including the complexity of its technical solution and required R&D investment, as well as whether the right holder or inventor has the corresponding knowledge, experience, skills or material and technical conditions, and whether the right holder or inventor can present evidence proving that it conducted the related research and development.

In the patent dispute of Nanjing Medlander Medical Technology et al v Nanjing Vishee Medical Technology (2016), the court questioned the inventor recorded in the patent application, establishing that the claimed inventor: had no learning or working experience in the technical field involved; had failed to recognise and distinguish similar products in the field; and had shown insufficient on-site skills to use the professional software involved in the patent application to draw the patent drawings. Therefore the court determined that the inventor was clearly not the actual inventor of the patent in dispute.

In another patent dispute example, Shenzhen Moshi Technology v Duntai Technology (Shenzhen) (2020), the court examined whether the inventor had the ability to research and develop the patented technology involved by checking the inventor’s educational background and work experience, as well as R&D records submitted by both plaintiff and defendant.

Meanwhile, based on the fact that the departed employee was the legal representative of the new employer, the court – by comprehensively judging from the degree of correlation between the evidence and the facts and related evidence – determined that the departed employee and the new employer had applied for the patent in the name of another person to circumvent laws and regulations.

Such cases are hardly rare. If the plaintiff can provide sufficient evidence while the defendant cannot reasonably explain and describe the patented technology, the court will not support such an act of circumvention.

Available measures

If it is found that a departed employee files a patent application in the name of another person within one year after leaving a company, and the patent involved is indeed related to the employee’s tasks undertaken for or assigned by the former employer, the former employer may take the following measures to protect its own legitimate rights and interests.

Filing patent ownership lawsuits with the court, asserting former employer as owner of patent or patent application. First, the former employer needs to provide evidence on specific content of work the departed employee has undertaken, or tasks assigned by the former employer, including the departed employee’s duties and authorities as well as technical information related to the patent involved.

Second, the former employer needs to prove the relationship between the patent involved and the departed employee’s work undertaken or tasks assigned – citing evidence from specific circumstances including: the patent’s technical field; technical problem solved; purpose and technical effect of the invention; scope of protection limited by the claims; and “substantial features” of the patent involved in relation to the present technology.

Defending rights on grounds of infringing trade secrets. If the technical solution filed by the departed employee for patent registration on its own constitutes trade secrets, the former employer may, in accordance with relevant provisions of the Anti-unfair Competition Law, claim that the departed employee disclosed trade secrets by filing patents without permission – and request cessation of the infringement with compensation for damages.

If the infringement of trade secrets is serious and constitutes a crime, the former employer may even report the case to the local public security authority.

Some suggestions

To avoid potential disputes over patent ownership in technical research and development in future, companies are recommended to provide detailed and specific work scopes, including who is in charge of projects, and research directions for R&D employees in their labour contracts or statement of work.

Enterprises could bi-annually confirm work results or plans of R&D employees to learn their ongoing detailed tasks and current work progress.

Special attention should also be paid to preserving original evidence such as relevant information on technical R&D, internal communication records, correspondence and test records using timestamps and other methods for evidence preservation if necessary.

Only then will it be possible for employers to avoid outflow and loss of R&D results due to departure of employees – and secure victory in possible disputes over patent ownership in the future.

Chen Jian is the managing partner of Wan Rui Law Firm, a member of Sanyou IP Group