How do we use the employee invention system?

Hello. This is an attorney specializing in intellectual property rights at Daeryun Law LLC.

In a company, in order to properly utilize the employee invention system, the entire process, from invention reporting to compensation calculation and dispute prevention, must be systematically operated without stopping at merely satisfying the minimum requirements demanded by law.

An employee invention is completed through the combination of the individual employee's creative effort and the company's research and development support, so the company can lawfully acquire the rights only if it clearly establishes regulations concerning the succession of employee inventions and compensation standards and announces them within the company.

First, the company must set out, in the employment contract, rules of employment, work regulations, or separate employee invention compensation regulations, the criteria for distinguishing employee inventions from personal inventions, the invention reporting procedure, the method for determining whether to acquire the invention, and the compensation system (application, registration, working compensation, and the like).

In this case, if the regulations are changed to the disadvantage of employees, the consent of a majority of employees is required, so the legality of introducing the system is secured only after prior explanation and sufficient consultation.

Once an invention is completed, the employee must promptly submit documents such as an invention report, an invention description, and a co-inventor share report, and the company must evaluate whether the invention constitutes an employee invention and whether it has commercial value, and notify its decision to acquire or not acquire the invention in writing within the deadline.

An evaluation table for technical merit, commercial viability, and rights, along with the operation of an employee invention deliberation committee, is an essential factor in preventing disputes.

Compensation must be calculated by comprehensively reflecting the company's contribution, the inventor's contribution, and the economic benefit generated by the invention.

Not only fixed compensation such as application compensation and registration compensation, but also working compensation paid when an increase in product sales or a cost reduction occurs, and disposition compensation corresponding to the distribution of technology transfer and license revenue, must be included.

This compensation system must be disclosed in advance through internal regulations to prevent compensation disputes from arising later.

Daeryun Law LLC provides one-stop support reflecting the R&D structure and technical field characteristics of each industry, covering the design of employee invention regulations, the establishment of invention reporting and evaluation processes, compensation calculation systems, and dispute prevention and response measures, so we recommend that you consult with Daeryun, the 9th-largest law firm in Korea (based on 2025 value-added tax filings with the National Tax Service), whenever you need assistance.