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| IP Newsletter | Winter 2013/14 |
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PATENT |
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Additional Details Announced Regarding Revised Invention Promotion Act |
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The Invention Promotion Act ("IPA") was recently amended to increase employee rights and encourage employers to pay fair compensation to its employees for employee inventions ("Revised IPA").1 The Revised IPA went into effect on January 31, 2014. |
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On October 11, 2013, proposed legislation regarding the Enforcement Decree of the Invention Promotion Act (“Revised Decree”) was announced revealing additional details about the Revised IPA. The Revised Decree went into effect with some modifications. |
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In particular, the Revised Decree provided specifics regarding (1) procedures for enacting and modifying invention compensation programs and (2) procedures for resolving disagreements regarding employee inventions such as the level of compensation. |
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1. Majority Consulted and/or Consent From Employees Required |
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The Revised IPA requires employers to consult with its employees when an inventor compensation program is enacted or modified. Further, if the modification is unfavorable to the employees, consent needs to be obtained from the employees before the modified compensation program may be implemented. |
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More specifically, the Revised Decree specifies that (1) when an employer drafts/modifies its invention compensation program, a majority of the employees that will be affected by the compensation rules must be consulted; and (2) if the modification to the compensation rules are unfavorable to the employees, consent must be obtained from a majority of the employees that are affected by the currently existing compensation rules. |
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The Revised Decree also specifies that an employer must provide notification to the employees and consult with/obtain the consent of its employees at least 15 days before the compensation rules are adopted or modified. |
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2. Formation and Operation of the Employee Invention Review Committee |
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The Revised IPA requires the establishment and operation of an Employee Invention Review Committee (“Review Committee”) to review disagreements between the employer and employee regarding employee invention-related matters such as the appropriate level of compensation. If an employee disagrees with the level of compensation, the employee may request that a Review Committee review the matter. After a request has been made, the Review Committee must review the matter within 60 days of the request. |
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The Revised Decree requires that the Review Committee include at least (1) three “employer committee members” appointed by the employer (or a corporate representative); (2) three “employee committee members” elected by the employees (excluding corporate executives) through a direct/secret/unregistered vote; and (3) one “advising committee member,” who is an expert regarding employee compensation programs, appointed through agreement by both parties.2 |
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If a review is not carried out after a request has been made, the employer may be fined up to 10 million won (approximately USD 9,500). |
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While the recent announcement has clarified some issues, there are still many issues left unclear. For instance, it is unclear how to reasonably include an employer's profits or expected profits into the compensation amount. It is also unclear who can be a proper candidate for the advising committee member position. Thus, we will continue to monitor and provide updates as they become available. |
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1 For details of the Revised Invention Promotion Act, please see Kim & Chang Newsletter – Summer/Fall 2013.
2 If an employer has less than 30 full time employees, the Review Committee requires a minimum of just 1 employer and employee committee member. |
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If you have any questions regarding this article, please contact: |
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For more information, please visit our website: www.ip.kimchang.com |
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