The National Assembly of Korea passed a bill to amend the Invention Promotion Act (the “IPA”) on January 9, 2024, which relaxes the requirements for employers to succeed to rights in work-for-hire inventions, and introduces grounds for courts to issue orders to submit materials and to maintain the confidentiality of submitted materials in lawsuits seeking compensation for work-for-hire inventions. The amendment to the IPA will come into effect on August 7, 2024.
Under the current IPA, the employer is required to notify the employee in writing if it intends to claim ownership of an employee’s invention, regardless of the presence of a contract or employment regulation granting it such rights. This notification must be provided within four months of being notified that the employee invention has been completed. Until the employer provides notice of its succession to the rights, the ownership of the in-service invention remains uncertain. As such, there has been a risk of double transfer by the employee of the rights to an in-service invention (to a third party as well as the employer) under the current legal regime.
Another issue with the current law is that it is difficult for courts to evaluate the compensation amount calculated for an in-service invention. This is because the current IPA lacks any procedural mechanisms to provide for evidentiary materials necessary for such calculation to be presented to the court, such as orders to submit materials and to maintain the confidentiality of submitted materials.
The above issues are addressed in the amended IPA (the “Amended IPA”) as follows:
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Relaxed Requirements for Employer’s Succession to Rights to Employee Inventions |
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New Court Powers to Order Submission of Materials Necessary for the Calculation of Compensation for Employee Inventions
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By relaxing certain requirements related to employers’ succession of the rights to in-service inventions by their employees, the Amended IPA significantly reduces employers’ inconvenience relating to in-service inventions and clarifies the ownership of such inventions. Companies that have contracts or employment regulations on in-service inventions based on the current IPA are advised to check whether such contracts and regulations may need to be reviewed in line with the Amended IPA.
As a result of this amendment, the number of lawsuits seeking compensation may increase, now that courts can order the submission of materials necessary to calculate compensation for in-service inventions. Companies where many in-service inventions are developed may need to review whether their compensation policies are appropriate and properly supported to be prepared to respond to such lawsuits.