INVENTORSHIP DISPUTE IN SERVICE INVENTION

First Instance Docket: (2015) NingZhiMinChuZi No. 130

Second Instance Docket: (2016) SuMinZhong No. 988 CIVIL CASE

CASE 1 :

Jiangsu Province

[Headnotes]

In determining whether an invention is a service invention, finding of facts must be based on current existing law pertaining to civil rule of evidence, i.e., to make a comprehensive determination in accordance with legal procedural rules in overall and objective consideration of the evidence and of the relevancy of the evidence with the case. In specific cases, professional ethics of judges must be followed, and logical reasoning, together with daily life experience, must be adopted to reach a conclusion on the credibility and weight of the evidence, the rationale and result of which should be publicized.

[Synopsis]

Appellant (Defendant below): Nanjing Mailande Medical Technology Co., Ltd. (Mailande, or Medlander)

Appellants (Third Parties below): Mr. Shi, Mr. Yang, Mr. Zhou, and Mr. X. Yang

Appellee (Plaintiff below): Nanjing Vishee Medical Technologies Holdings, Ltd. (Vishee)

Vishee is an enterprise specialized in research, manufacture and sale of medical appliances. Shi, Yang, and Zhou are all former employees of Vishee, being responsible for the departments of R&D, Products, and Quality respectively. Beginning in 2010, Vishee applied for more than ten patents, for which Shi, Yang and Zhou were included in the named inventors.On January 16, 2013, Medlander was set up as a company, doing roughly the same business as Vishee, with X. Yang being a shareholder. After Medlander was formed, Shi, Yang, and Zhou subsequently left Vishee and joined Medlander for work up to now.

On November 5, 2012, X. Yang filed an application for an invention patent “Vagina Electrode” under application number 201210435831.2 (the patent at issue). On September 13, 2013, a change of applicant was recorded for Medlander; and on April 16, 2014, the patent was approved and published, with the certificate showing inventor as X. Yang, and patentee as Medlander. Vishee contended that, because X. Yang had never been involved in the business of medical appliances or relevant research, the actual inventors of the patent at issue ought to be Shi, Yang, and Zhou, who, while being employed at Vishee, were appointed to work on the research and development of the patented invention at issue by using Vishee’s financial resources, place, equipment, materials, and nondisclosed technical data for a long time. For this reason, the patent at issue corresponding to the work result of the above three for the subject of their jobs at Vishee, and should therefore be service invention for which the patent ought to be awarded to Vishee. Medlander countered that the patented invention at issue was completed by X. Yang, from whom Medlander obtained the patent by assignment; that Shi,Yang, and Zhou were not actual inventors of the patent at issue; that the patent had nothing to do with the work of Shi, Yang and Zhou at Vishee; and therefore the patent should belong to Medlander.

The Nanjing Intermediate Court found: (1) that X. Yang is not the inventor of the patented invention at issue since he lacks the work experience, professional knowledge and research ability for the patent at issue; (2) that the patent at issue is the result of the work of Shi, Yang and Zhou during their employment at Vishee and therefore is a service invention; (3) that the quitting and job-hopping of Shi, Yang and Zhou were premeditated, and the three, in order to evade the law, filed the patent application in the name of X. Yang, transferring then to Medlander, a corporation, to make selfish gains under the disguise of corporate veil. In sum, the Nanjing Intermediate Court at first instance trial decided that the patented invention at issue was a service invention, to be owned by Vishee.

Medlander, Shi, Yang, Zhou, and X. Yang were not satisfied with the first instance judgment, and appealed to the High People’s Court of Jiangsu, which dismissed the appeal and affirmed the original judgment. Medlander was still dissatisfied, and petitioned the Supreme People’s Court for reconsideration, which was rejected.

[Judge’s Comment]

In this case, the Jiangsu High Court at second instance found: I. In Chinese patent application process, no substantive examination is made as to inventorship indicated in the application document; therefore, what is shown in the letters patent is merely a de jure inventor, which does not serve as a de facto inventor. As far as X. Yang’s statement is concerned regarding the inventive process, the patent application, and the assignment, neither supported by evidence or by facts, part of which was even selfcontradictory – showing his lack of knowledge in the patent invention field – it failed to prove his assertion as the inventor of the patent at issue.

II. Since the patent at issue relates to the service invention by Yang, Shi, and Zhou, it should belong to Vishee. First, Yang, Shi, and Zhou should be recognized as the actual inventors. On the other hand, as pointed out by the first instance trial court, judged by the work experience of Shi, Yang, and Zhou at Vishee, the three have absolute professional knowledge and research capability of the patent technology, in possession of the core technology underlying the patent, and have the motive and intention to appropriate Vishee’s technological fruit for selfish gains. It is further shown from the patent application document that Shi, Yang, and Zhou are closely connected with the completion of the invention. In sum, it is unconvincing that Shi, Yang and Zhou are not the actual inventors.

Upon consideration, the Supreme People’s Court sustained the judgment of the second instance court.

This case is a dispute over patent ownership due to service invention, of which the unique aspect is: the inventor indicated in the patent document is not a former employee, but a third party unrelated to a former employer, and this third party inventor, after filing the application, immediately assigned it to another third party corporation, namely, the defendant in this case. Because the third parties, the corporation and the nominal inventor had no legal relationship with plaintiff, it was difficult to determine the inventorship on basis of relevant statute, but to be made by combining the provisions of the Patent Law on ascertaining identity of inventors, and on service inventions. This case is significant in that it provides important reference as guidance for similar future cases. This case also produces positive social effect for the breadth and effect of its judgment which signals judicial enhancement of entrepreneurial innovation, as well as judicial guidance for good-faith innovative startup and fair competition.