Structuring Present Assignment Clauses and Power of Attorney in Hardware PIIA Agreements
Present assignment clauses and irrevocable powers of attorney in hardware PIIAs secure immediate IP ownership and enable unilateral patent filings.
PRC Statutory Remuneration
Meaning
Mandatory financial compensation that employers in the People’s Republic of China must pay to employees for service related inventions. The rules for prc statutory remuneration require that the inventor receives a reward when a patent is granted and a further share of the profits when the invention is used. These payments are required by national law unless the parties have a valid written agreement that specifies a different amount.
This system aims to encourage innovation within the domestic workforce.
Mandatory Payment
The initial reward for prc statutory remuneration is due as soon as a patent for an invention is officially issued. Failure to make this payment can lead to legal action by the employee and potential penalties from regulatory authorities. The law sets minimum amounts for different types of patents, including invention patents and utility models.
Even if the company does not immediately commercialize the technology, the grant of the patent triggers the first payment.
Contractual Override
Companies can set their own rates for prc statutory remuneration by including specific clauses in employment contracts or internal policies. These agreements must be reasonable and follow a transparent process to be enforceable in court. If the contract is found to be unfair, the court may default back to the high rates specified in the national statutes.
Proper documentation of the agreement is necessary to manage long term payroll liabilities.
Reward Calculation
The ongoing portion of prc statutory remuneration is typically based on a percentage of the net income generated by the patented product. This calculation can become very complex for hardware that contains multiple patented components. Companies often use a fixed annual fee or a lump sum payment to simplify this process.
Accurate accounting of patent related profits is required to defend against claims of underpayment.