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Patents - Law on Employees' Inventions - Hong Kong

In general, inventions made by employees in the course of their normal duties will belong to the employer. As such, the employer will generally own the invention and have the right to exploit the invention however it wishes, without requiring an assignment from the employee, or having to pay additional compensation to the employee. However, if a patent is granted to the employer for an invention made by an employee after 27 June 1997, and the patent is judged by the Hong Kong High Court ("the Court") to be of outstanding benefit to the employer (taking into account the nature and size of the employer's business), the employer may have to pay additional compensation to the employee.  This applies to both standard (20 year) and short term (8 year) Hong Kong patents, and to patents and other forms of protection for inventions granted in any other country, territory or area in cases before the Court.  

This article sets out the key rules and considerations relating to employee inventions in Hong Kong.


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-When does the law on employees' inventions apply?

Inventor

When determining questions of ownership relating to employees' inventions, it is necessary first to determine the identity of the "inventor". The Patents Ordinance (as amended) (the "PO") gives very little guidance on this apart from saying with regard to employee inventors that references to the making of an invention does not include merely contributing advice or other assistance*.

Employee

An "employee" is defined in the PO** as "a person who works or (where the employment has ceased) worked under a contract of employment (whether with the Government or with any other person".

The rules on employees' inventions in the PO do not apply to non-employees. Thus, inventions made by consultants, directors, contractors or other third parties are not covered by these provisions. There is also some doubt as to whether inventions made by apprentices would be subject to these rules. It is a question of fact as to whether a given individual is an "employee" for the purpose of these provisions. Thus, if the company wishes to retain ownership of inventions made by such persons, appropriate contractual arrangements must be made to ensure ownership is assigned to the company.

It should also be noted that there is a territorial restriction on these rules: they apply only to employees either (i) "mainly employed" in Hong Kong at the time the invention was made or, (ii) if they are not mainly employed anywhere or if their place of employment cannot be determined, only if their employer has as place of business in Hong Kong to which they are attached. 

* s.61(3) PO

** s.2 PO 



-Who becomes owner of employee inventions?

The statutory rules for determining ownership of employees' inventions are set out in sections 57 to 61 of the PO.

Section 57 of the PO (click for link)  sets out the general assumption that employee inventions shall be taken to belong to the employer provided certain conditions are met, such as the invention being made during the course of the employee's normal duties, or where the employee had a special obligation to further the interests of the employer's undertaking. Any other inventions made by the employee shall be taken to belong to the employee*.

It is a question of fact as to whether or not the invention was made in circumstances which would fall within the scope of these provisions. Thus, it is generally advisable that individuals who have made an invention, and in particular, those individuals who are not specifically employed to invent, should be asked to enter into an assignment agreement to transfer the rights in the invention to the employer. This should be done prior to any patent applications being filed. Note that under Hong Kong law, a contract assigning future patent rights and rights in future inventions made by an employee is unenforceable to the extent that it diminishes the employee's rights.

* s. 57(2) PO 



-Which duties do employers have in relation to employee inventions?

The employer is under no obligation to file a patent or to protect an employee's invention in any other way.


-Is the employee inventor entitled to additional remuneration?

Under certain circumstances, a Court may award an employee additional remuneration for an invention. The employee must apply to the Court for compensation during the period from grant of the patent up to one year after it ceases to have effect, or within six months of any application to restore the patent which has been refused. 

In order for an award to be made, the Court must decide that (1) the patent is of outstanding benefit to the employer; and (2) it is just that the employee should be granted additional remuneration.



-How is the remuneration calculated?

The amount of remuneration awarded is determined in accordance with s.59 of the PO. The sum shall be such as to give the employee a fair share (having regard to all circumstances) of the benefit which the employer has derived or may reasonably be expected to derive from the patent or the assignment or grant to a person connected with the employer.  Any payment ordered by the court can be either by a lump sum or periodic payments.


-Are contractual agreements possible?

It is not possible for individual employers and employees to contract out of these provisions.


-Procedural Issues

The question of ownership of employees' inventions generally arises during entitlement disputes. An employee who wishes to claim ownership of an invention made during the course of his employment must make an application to the Registrar of Patents or the Court prior to the grant of any patent, or to the Court after the patent is granted in accordance with the relevant provisions of the PO.