Meaning
Legal rules in China dictate the specific remuneration and rewards that employers must provide to inventors for service inventions. Under chinese patent law article 77, an enterprise that receives a patent must award a monetary prize to the inventor within a specified period from the grant date, and subsequently pay a reasonable exploitation fee or royalty. This statutory duty overrides silent contracts and governs all domestic employees.
Inventive Award
Corporate entities face fixed minimum defaults if they fail to execute a custom reward agreement with their technical staff. Under this rule, the statutory minimums of three thousand yuan for an invention patent and one thousand yuan for a utility model are triggered. These numbers set the floor for private compensation models.
This obligation persists even if the original filing has been transferred to an overseas parent entity, which binds the local subsidiary to the domestic regime regardless of subsequent corporate transactions.
Exploitation Royalty
Patent exploitation triggers additional ongoing payments to the designated inventors when the business utilizes the technology internally. The default standard allocates a small percentage of after-tax profits arising from the patent to the technical author. Employers avoid this administrative burden by pre-negotiating clear, reasonable compensation clauses in employment contracts.
Remedial Action
Disputes over inadequate inventor rewards find resolution in Chinese courts or administrative patent offices. Inventors can sue to enforce their right to the statutory percentages when agreements are absent or unconscionably low. This creates a compliance risk for multinational research centers operating in the region.
