China Patents, Copyrights, and Works Made for Hire

China patents and China copyrights
  Who owns your China IP? Get it in writing.

Conceptually, the basis of the “work made for hire” (often shortened to “work for hire”) doctrine is clear: employers should own (some) rights to work created by their employees, whether such work is protectable by copyright, patent, or some other IP right.

But legally, it’s as clear as mud. The “work for hire” doctrine actually only applies to copyrights. Patents are covered by the “hired to invent” and “shop rights” doctrines in the US, and by the “invention for hire” doctrine in China. And though the patent doctrines have some similarity with the respective copyright doctrines, they are not the same. Not even close.

Legal scholars have explored in some detail why copyrights and patents for employee-created work are treated differently in the U.S. (see here and here), and make the credible argument that a uniform doctrine should apply to both forms of IP. I am unaware of similar scholarship explaining why copyrights and patents are treated differently in China, but note that modern Chinese IP law is based on Western models, and was largely adopted as part of China’s (relatively) recent accession to the WTO. Suffice it to say, the default rules regarding copyrights and patents for employee-created work are different under both Chinese and U.S. law, and employers need to understand those differences or be caught unawares when it comes time to enforce their IP rights.

As I explained a couple months ago in this space, Chinese copyright law is quite employee-friendly.

Per Article 16 of the Copyright Law and Article 13 of the Regulations for the Protection of Computer Software, the default rule in China is that an employee will own the copyright to anything they create during the course of employment, except for (1) “drawings of engineering designs and product designs, maps, computer software and other works which are created in the course of employment mainly with the material and technical resources” of the employer and (2) computer software developed at the employer’s direction or as an inevitable consequence of the employee’s job description. For all other works, the employee will own the copyright; the employer has a two-year exclusive license to use the copyrighted material, and thereafter a non-exclusive license.

If an employer (say, a WFOE) wants a different rule to apply to its employees’ creations, it needs specific language in a signed contract with the employee that assigns all rights in any “work for hire” to the employer. Such contract should be in Chinese and governed by Chinese law, and signed at the beginning of employment.

Chinese patent law, by contrast, is rather employer-friendly.

Per Article 6 of the Patent Law and Rule 12 of the Implementing Rules of the Patent Law, the default rule in China is that an employer will own the patent rights to any invention for hire, which includes any invention created: (1) within the scope of employment, (2) outside the scope of employment but nonetheless assigned by the employer as a task, (3) within one year after the end of employment and satisfying either of the two previous conditions, or (4) mainly by using the employer’s resources. In other words, pretty much everything.

Employers do not need to sign a specific agreement with employees to own the patent rights to such inventions; nonetheless, it is always a good idea to do so, to avoid any confusion. If you’re an employer, the last thing you want is an argument with your employees about whether their creation is an invention protected by patent (and therefore your property) or a creative work protected by copyright (and therefore their property).

The bottom line is that all employers in China involved in creative work should enter into a comprehensive IP ownership agreement with each employee at the beginning of employment. The agreement should be in Chinese and governed by Chinese law, and should unequivocally establish the employer’s ownership of any works created by the employee, whether governed by copyright, patent, or otherwise. Putting all this in writing will protect the employer’s rights, and just as importantly, it will make those rights clear to both sides. A well-drafted agreement can stop a dispute before it even arises.

Matthew Dresden

Matthew focuses on international and China law, with a focus on technology and entertainment law and Chinese transactional and IP work. He represents a wide range of companies, from start-ups to NYSE-traded companies. His work has included matters for film studios, cable channels, film and television production companies, video game developers, magazines, restaurants, wineries, international design firms, product manufacturers, outsourcing companies, and computer hardware and software companies.