| Recent Revisions to Korean Invention Promotion Act |
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| While many lawsuits have been filed seeking compensation for employee inventions recently, the National Assembly of Korea passed a bill to revise the Invention Promotion Act (IPA) on January 9, 2024. The amendment to the IPA will come into effect six months after the date of promulgation. We would like to bring your attention to the following notable changes. |
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| 1. |
Easier Rules for Employers to Acquire Ownership of Employee Inventions |
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| Under the current IPA, even if there is a contract or an employment regulation that entitles the employer to succeed to the right to an employee invention, the employer is required to notify the inventor-employee in writing that the employer succeeds to the rights to the invention within the period specified by the Presidential Decree (i.e., four months from receipt of a notice of completion of employee invention). Accordingly, there was a concern that the employee may assign the rights to a third party before the employer had a chance to obtain the rights to the employee invention (i.e., during the time that the employee provides notice of the invention but before the employer confirmed that it wanted to acquire ownership of the invention). |
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| However, under the revised IPA, if a contract or an employment regulation which entitles the employer to succeed to the right to an employee invention has been executed or adopted in advance through consultation between the employer and the employee, the ownership rights to the employee invention are automatically acquired by the employer at the time when the invention is completed. As an exception, the employer is required to notify the employee within four months from the receipt of the invention disclosure only when the employer decides not to acquire ownership to the employee invention (Article 13(1) of the revised IPA). |
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| In contrast, if there is no contract or employment regulation which entitles the employer to automatically succeed to the rights to the employee invention, the employer must notify the employee in writing within four months regarding whether the employer intends to acquire the ownership rights to the invention (similar to the current IPA requirements) (Article 13(2) of the revised IPA) and cannot acquire the rights to the invention if the employee does not consent to the assignment. |
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| Article 13 of the revised IPA will apply to employee inventions which are completed after the revised IPA becomes effective. |
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| 2. |
Specific Statute Authorizing Document Productions Needed to Calculate Compensation for Employee Inventions |
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| In general, Korea has limited discovery. Thus, it is generally difficult to obtain information from opposing parties. Moreover, parties often refuse to produce requested information claiming that the information would contain confidential trade secret information. This has led to difficulties when trying to obtain documents to establish the appropriate compensation, which is based in part on the employer's profit that is attributable to the employee invention. |
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| Consequently, the revised IPA newly introduced a provision on document/material production orders that allows the court to order a party to submit materials that are necessary for calculating the appropriate amount of compensation (Article 55-8 of the revised IPA). Additionally, the revised IPA also provides for protective orders to protect confidential information (Articles 55-9 to 55-11 of the revised IPA). Thus, merely claiming that information is a trade secret will no longer be a justifiable reason to refuse production. |
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| In view of the upcoming changes, we encourage companies to review their employee invention policies as well as to prepare for the possibility of producing financial documents/information relevant to inventor compensation awards. |
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