Under the Invention Promotion Act, an employee has the right to receive reasonable compensation in return for assigning in-service inventions to their employer. In determining reasonable compensation, an employer should consider the profits the employer has obtained or expects to obtain from the exclusive use of the invention, as well as how much the employee contributed in completing the invention when compared to the contributions of the employer or other employees (see Article 15(6) of the Invention Promotion Act and Supreme Court Decision No. 2014Da220347 rendered on January 25, 2017). Korean courts have oftentimes required little evidence to acknowledge that the employee is entitled to additional compensations, e.g., that an issued patent alone affords a certain degree of benefit to the employer when determining reasonable compensation for employee inventions. However, recent decisions, as discussed below, show that Korean Courts are beginning to review employee invention compensation cases under a heightened level of scrutiny, requiring employees provide clear supporting evidence connecting the companies' profits with the contribution to the invention.
Medical Device Case
A former employee of a medical device company sought compensation for an in-service invention based on an issued patent. In the past, Courts have often assumed that the employer's profits were attributable to the invention without requiring detailed evidence directly linking the employer's profits to the invention. Criticizing this trend, the medical device company argued that the employee must show that the employer's profits were directly attributable to the exclusive use of the invention. The District Court held that the employee is not entitled to the reasonable compensation because the medical device company does not appear to have gained any profit from the exclusive use of the in-service invention. The Court looked at several factors, including: how much of the product is attributable to the invention, whether the invention is a major factor for customers in purchasing the product, whether the invention can be seen as a major cause of increase in sales or market share, whether the invention makes the product technically superior to competitors' products, and whether there is an alternative technology to the invention (see Seoul Central District Court Decision No. 2019Gahap563099 rendered on May 27, 2022). In sum, the employee was not entitled to compensation because they failed to directly connect the profits with the employee's contribution.
Automotive Engine Case
An employee for an automobile manufacturing company sought compensation for a patented invention used in mass-produced automotive engines. The case was appealed all the way up to the Supreme Court of Korea. After a detailed review, the Appellate and Supreme Courts found that the employee failed to establish that he had made any meaningful contribution to the invention that could be connected to the company's profits.
We will continue to keep an eye out to see if this trend of holding employees accountable for establishing a direct nexus between their level of contribution and the employer's profits continues. If so, employers may look into reevaluating your employee compensation programs and policies.