Whose property is an invention made on the job? Korean Invention Promotion Act keeps the general rule that 'the inventor is the right holder', but adds a special framework for employee inventions so the employer can step in: a free non-exclusive licence arises automatically, and the employer can take the right itself by pre-assignment agreement.
The price for that succession is reasonable compensation. If the employer takes the right, the employee is entitled to fair compensation, and inadequate amounts can be litigated for top-up payments. The August 7, 2024 amendment loosened the succession requirements and introduced disclosure and protective orders in compensation litigation, while the Supreme Court decision of November 14, 2024 (2023Da287168) clarified when default interest starts running. This guide ties those changes into a working overview of the system.
Three Elements of an Employee Invention
An 'employee invention' under the Act is narrower than 'an invention made at work'. Three elements must all be met; if any is missing, the work is a 'free invention' and the employer gains no special rights.
- Made by an employee — full-time, contract, or executive — anyone in an employment relationship with the company
- Within the employer's business scope — current or planned business or research areas of the company
- Within the inventor's current or past duties — falls within the work the employee did or used to do
Rights Structure — Employee First, Free Licence to Employer
Korea's general rule (Patent Act art. 33) places the right with the inventor, so the employee is the original right holder even for an employee invention. Article 10(1) of the Invention Promotion Act then layers on a free non-exclusive licence to the employer, granted automatically when the invention qualifies. The company can use the invention in its own business without any further agreement.
Pre-Assignment Agreement — Taking the Right Itself
To go beyond the licence and take the right to apply for or hold the patent, the employer needs a pre-assignment agreement. The most common implementation is a clause in the employment contract or a separate employee-invention compensation policy stating that 'rights to employee inventions transfer to the company' source. Without a pre-assignment, the company has thin legal grounds to claim ownership after the fact.
Reasonable Compensation — Four Categories
If the employer succeeds to the right, it owes reasonable compensation to the employee (Invention Promotion Act art. 15). The four standard categories track the lifecycle of the invention. Spelling out type and calculation in the company's compensation policy is the cheapest way to prevent disputes.
| Type | When paid | Calculation |
|---|---|---|
| Filing | Employer files the application | Fixed amount or scaled by claim count |
| Registration | Patent is granted | Fixed amount or scaled by claim count |
| Working | Employer earns from working the invention | Employer's gain × contribution rate |
| Disposition | Right is assigned or licensed | Percentage of the consideration |
Calculating Compensation — Employer Gain × Contribution
Courts compute reasonable compensation roughly as employer's gain from the invention × (1 − employer contribution) × inventor share. Employer gain is derived from sales attributable to internal working (converted via a hypothetical royalty) or directly from licensing or assignment proceeds. Co-inventors are pro-rated by individual share.
August 7, 2024 Amendments to the Invention Promotion Act
Effective August 7, 2024 (promulgated February 6, 2024), the amendments touch both ends of the system — succession on the employer side and compensation litigation on the employee side. Three changes stand out.
- Easier employer succession — broader path to succeed to rights even without a pre-assignment in some scenarios
- Disclosure orders in compensation suits — courts can compel production of employer revenue and profit data
- Protective orders — trade secrets exposed during disclosure are shielded from leakage
Why Adopt a Compensation Policy
Setting up an internal employee-invention compensation policy is more than compliance. Companies certified as outstanding employee-invention firms receive KIPO benefits — annuity reductions for years 4-9 (50% on certain mid-sized firms), expedited examination eligibility, and bonus points in government R&D programmes. The same procedural rigour also strengthens the presumption that the compensation was reasonable in any later dispute.
- Annuity reduction
- 50% on years 4-9 Subject to mid-sized eligibility etc.
- Expedited examination eligibility
- Faster prosecution For self-working or preparing-to-work cases
- Government R&D bonus
- Evaluation premium Varies by programme
- Litigation presumption
- Reasonableness easier to defend Procedural fairness emphasised
Six-Step Compliance Checklist
Almost every employee-invention dispute turns on whether the procedure was reasonable. Reflecting the six items below in policies and operations dramatically lowers exposure.
- Pre-assignment clause — in the employment contract or a separate consent form at hire
- Adopt and publicise an employee-invention policy — internal posting plus employee acknowledgement
- Define types and formulas — cover all four (filing, registration, working, disposition)
- State payment dates clearly — the 2023Da287168 hedge against default interest
- Provide an objection process — employee channel for re-evaluation
- Pursue outstanding-firm certification — annuity and examination perks worth the paperwork
Frequently Asked Questions
Q1. Are inventions by executives also employee inventions?
Yes, when there is an employment or mandate relationship and the invention falls within the company's business and the executive's duties. Executives' duty scope is generally read more broadly, which makes 'past duty vs current duty' a frequent battleground. Best practice is to set executive compensation through bylaws or board resolution to harden the procedural defence.
Q2. Is compensation a one-time payment?
It depends on the type. Filing and registration compensation are one-time; working compensation continues as long as the employer earns from the invention; disposition compensation can spread out if the consideration is paid in instalments. Companies should reserve for ongoing payment streams — including post-employment claims — when an invention generates continuing benefit.
Q3. What if the employee assigns the invention externally with no pre-assignment in place?
Because the invention is within the employer's business, an outside assignment damages the employer's licence position. Without a pre-assignment, however, the employer cannot block the transfer of the right itself directly and is left with damages or breach-of-contract claims. The pre-assignment is the primary safeguard against this scenario, which is why it should be locked in at hiring.
Q4. The employee resigns and later sues for higher compensation — what about the limitation period?
General civil (10 years) or commercial (5 years) limitation periods apply, but the start date depends on the compensation type, payment timing, and demand date. Reading 2023Da287168 alongside, when there is no fixed payment date the obligation triggers default interest from the demand. Without a clear due date in the policy, this becomes the central battleground in litigation — fix it on the page.
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