EMPLOYEE'S RIGHT TO COMPENSATION FOR EMPLOYEE INVENTION

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(1) Definition of employee invention

The term "employee invention" refers to an invention that an employee under an employment contract makes in the course of his duties. An employee invention can be recognized where an invention: (i) is by the employee, (ii) falls within the scope of business of the employer, and (iii) is made in connection with the employee's duties. 

(2) Compensation for employee inventions

When an employer succeeds the patent right, utility model right, design right or the right to register the patent in relation to an employee invention or is granted an exclusive license for any of above rights, the employee is entitled to fair compensation.

Additionally, the employer must, in prior consultation with the employees, prepare compensation regulations stipulating the criteria for determining the type and amount of compensation and inform the employees thereof.

• Calculation method of compensation for employee inventions

Generally, when a dispute arises between an employer and an employee over employee inventions compensation, the following method is used to determine the amount.

    Compensation for Employee Inventions
 = [Profits to be earned by employer from the invention] x [Extent of the employee's contribution to   the invention]

Here, the [Profits to be earned by employer from the invention] means:
 (Sales revenue from the invention-embedded product)
 x (Rate of contribution of the invention to the product as a whole)
 x (Hypothetical royalty rate if a license to the invention is granted)
 x (Rate of contribution of obtaining exclusivity to the sales revenue)