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IP Newsletter | Spring/Summer 2017
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PATENT
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Supreme Court Affirms Employers Have Duty to Compensate Employee Inventors Even for Weak or Unused Patents
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- Supreme Court Decision Case No. 2017 2014Da220347, rendered on January 25, 2017
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In a much-scrutinized dispute between Samsung Electronics Co., Ltd. ("Samsung") and a former employee researcher regarding the appropriate compensation to be paid by Samsung for the employee's in-service invention, the Supreme Court has finally issued a ruling largely affirming the reasoning of the lower appellate court, and determining that Samsung must pay its former employee approximately KRW 22 million (roughly equivalent to USD 19K).
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The case involved two in-service inventions related to a keypad search scheme used in mobile phones. The focus of the Supreme Court's ruling was on one of these inventions, which the lower court had determined was highly likely to be invalidated, and also had not actually been used by Samsung. Though Samsung argued that these circumstances meant that Samsung should not have to pay inventor compensation for this patent, the Supreme Court disagreed, reasoning that non-use and likelihood of invalidation do not per se excuse a company from its remuneration duty, though such factors should be taken into account when calculating the proper amount of remuneration.
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Regarding likelihood of invalidation, the lower courts had disagreed as to whether Samsung had received any exclusive benefit from the invention in question (regardless of the invalidation issue) that would justify compensation to the inventor (see Seoul Central District Court Decision Case No. 2012Gahap501788, rendered on July 18, 2013; Seoul High Court Decision Case No. 2013Na2016228, rendered on July 17, 2014). The Supreme Court agreed with the lower appellate court in recognizing some benefit to the employer even if the patented invention had a high possibility of invalidation. In other words, likelihood of invalidation is merely a factor in calculating the amount of inventor compensation, not a complete bar to receiving compensation.
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Regarding non-use, both of the lower courts agreed, and the Supreme Court affirmed, that this is also a factor to consider when setting the compensation amount, not a bar to compensation. The Supreme Court reasoned that "even if the product actually manufactured and sold by the employer does not fall within the scope of the in-service invention, it might be a substitute for demand for other products actually implementing the invention. As such, if competitors were unable to use the invention due to the employer's patent rights thereto, and the employer thereby increased its sales, such increased sales could be deemed as a benefit to the employer from the in-service invention."
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The Supreme Court held that that there are potential benefits to companies from their employees' inventive activity regardless of whether the claimed invention is used or is likely to be invalidated. Thus, an employer is not excused from its duty to remunerate employees for their in-service inventions.
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