1.

Legal Nature of Employee-Invention Compensation Claims

In the case in question, the plaintiff/employee’s primary claim was for compensation for his in-service inventions under the IPA, with a secondary claim for compensation based on the defendant/employer’s internal regulations governing compensation for in-service inventions. Claimants in compensation lawsuits in Korea, in order to work around a statute of limitations issue as to the statutory claim, sometimes frame their compensation claims in this way (i.e., treating the statutory compensation claim under the IPA and the company’s regulations providing for such compensation as separate and independent obligations).

However, the Supreme Court made clear that, even where provisions on compensation for in-service inventions are included in an employment contract or workplace regulations, an employee’s right to claim such compensation remains a statutory claim—one recognized as a matter of policy to encourage in-service inventions. The Supreme Court reasoned that an employment contract or workplace regulations may specify the form of compensation, the criteria for determining the amount, and the method of payment for “fair compensation” required under the IPA. However, even in these cases, such provisions should be construed as merely supplementing/giving concrete shape to the statutory compensation claim under the IPA (rather than altering the fundamental legal character of the claim) absent special circumstances. In other words, the Supreme Court confirmed that a right to claim compensation for an in-service invention based on the company’s internal compensation regulations is not separate from the statutory claim under the IPA.
 

2.

Commencement of Statute of Limitations

Regarding the starting point of the statute of limitations on an employee’s statutory claim for in-service invention compensation, the Supreme Court had previously held that it generally begins when the employer succeeds to the in-service invention. However, where workplace regulations or similar instruments fix a specific time for payment, the Supreme Court has held that the designated time governs the starting point instead (Supreme Court Decision 2009Da75178, July 28, 2011; Supreme Court Decision 2021Da258463, May 30, 2024).

In the Decisions, the Supreme Court set forth a further compensation rule relating to establishing an “unfixed” due date. A company’s compensation rules may provide that compensation becomes payable only once certain requirements are satisfied for a given type of compensation—for example, where a patent is “assigned or licensed for value, or has generated a tangible benefit through the exercise of the right.” Such rules may also require that certain procedures, such as review and resolution by a deliberation committee, be completed first. The Decisions clarify that such rules do not give the employee an open-ended right to bring a compensation claim at any time. Rather, they create an “unfixed” due date. In such cases, the employee’s right to exercise a compensation claim begins when that payment due date arrives, and the statute of limitations to bring a compensation claim runs from that point.

This reasoning ties the starting point of the statute of limitations to the existence and specific content of a company’s compensation rules. Where a company requires that certain procedures be completed before compensation can be calculated, the statute of limitations arguably does not begin to run until those procedures are concluded. This creates a possibility that the company may face adverse consequences as a result of its own regulations. Employee-invention compensation claims are often filed long after the employer succeeded to the invention, making the statute of limitations a frequent point of dispute. The Decisions suggest that both the starting point of the statute of limitations and whether it has expired will be determined differently depending on the specific content of a company’s rules regarding the requirements and procedures for payment of employee-invention compensation.