Overview

The Supreme Court of Korea recently issued a significant decision addressing the legal nature of an employee’s right to claim compensation for a “service invention” (or employee invention) and the point from which the statute of limitations to initiate a claim begins to run (Supreme Court Decision No. 2025Da219742, June 24, 2026; the “Decision”). Because the ruling bears directly on how companies should administer employee-invention compensation and manage their internal compensation policies, we recommend that companies review the reasoning and implications of the Decision closely. The key points are summarized below.

For readers less familiar with the Korean regime, employee-invention compensation is governed by the Invention Promotion Act (the “IPA”), under which an employee who assigns the rights to a service invention to, or grants an exclusive license to, the employer is entitled to fair compensation. 

1. Legal Nature of the Compensation Claim

The Supreme Court made clear that an employee’s right to claim compensation for a service invention is a statutory (i.e., mandatory) claim—one recognized as a matter of policy to encourage service inventions—even where the employment contract or workplace regulations contain provisions governing such compensation. The Court reasoned that, even where a company’s contract or workplace rules specify the form of compensation, the criteria for determining the amount, and the method of payment for purposes of the “fair compensation” required under the IPA, such provisions should—absent special circumstances—be construed as giving concrete shape to, or supplementing, the statutory compensation claim under the IPA, and do not alter the fundamental legal character of that claim. 

In practice, claimants in compensation lawsuits have sometimes framed their claims as arising from a separate, independent contractual obligation based on the company’s compensation regulations, distinct from the statutory claim under the IPA. Reaffirming its established position, the Supreme Court once again confirmed that the right to claim compensation for a service invention is a statutory claim. 

2. Commencement of the Statute of Limitations Period

There has been some uncertainty in Korea regarding when the statute of limitations to bring an employee invention compensation claim begins to run. Under the Supreme Court Decision, the statute of limitations for a statutory claim begins to run as soon as the employer succeeds to the rights to the service invention, or the date specified by the employer in the company policy for payment of employee invention compensation. However, the Supreme Court held that where a company’s compensation rules provide for payment—in this case, after an internal review and resolution procedure—upon the occurrence of payment triggers such as where the patent for the service invention has been “assigned or licensed for value, or has generated a tangible benefit through the exercise of the right,” this constitutes setting an uncertain due date for the compensation. As a result, the Court ruled that, absent special circumstances, the employee’s right to bring a compensation claim does not begin to run until payment of compensation is actually received, not when the invention is transferred to the employer. 

3. Practical Implications

In light of the Court’s reasoning, the existence of a company’s own employee-invention compensation rules may well affect how the statute of limitations period runs going forward. From a company’s perspective, this means that even where considerable time has passed since the employer succeeded to a service invention, a compensation issue may arise anew at the point the company later exploits the invention. Companies should therefore consider carefully whether their current compensation rules may need to be revised to account for the uncertainty surrounding the statute of limitations period and to secure legal stability. 

The employee invention compensation system is fundamentally intended to stimulate employees’ creative drive to invent while giving companies an opportunity for growth—thereby fostering a mutually beneficial relationship between labor and management. Accordingly, companies that currently operate service-invention rules and agreements should closely review whether their existing compensation rules should be amended, both to deliver fair compensation that continues to encourage inventive activity and to minimize unpredictability around the statute of limitations period while securing legal certainty. This is especially important for companies with active service-invention programs, which should establish in advance multifaceted and strategic measures to reinforce labor-management trust while enabling reasonable risk management at the corporate level.