Об интеллектуальной собственности Обучение в области ИС Обеспечение уважения интеллектуальной собственности Информационно-просветительская работа в области ИС ИС для ИС и ИС в области Информация о патентах и технологиях Информация о товарных знаках Информация о промышленных образцах Информация о географических указаниях Информация о новых сортах растений (UPOV) Законы, договоры и судебные решения в области ИС Ресурсы в области ИС Отчеты в области ИС Патентная охрана Охрана товарных знаков Охрана промышленных образцов Охрана географических указаний Охрана новых сортов растений (UPOV) Разрешение споров в области ИС Деловые решения для ведомств ИС Оплата услуг в области ИС Органы по ведению переговоров и директивные органы Сотрудничество в целях развития Поддержка инновационной деятельности Государственно-частные партнерства Инструменты и сервисы на базе ИИ Организация Работа с ВОИС Подотчетность Патенты Товарные знаки Промышленные образцы Географические указания Авторское право Коммерческая тайна Академия ВОИС Практикумы и семинары Защита прав ИС WIPO ALERT Информационно-просветительская работа Международный день ИС Журнал ВОИС Тематические исследования и истории успеха Новости ИС Премии ВОИС Бизнеса Университетов Коренных народов Судебных органов Генетические ресурсы, традиционные знания и традиционные выражения культуры Экономика Финансирование Нематериальные активы Гендерное равенство Глобальное здравоохранение Изменение климата Политика в области конкуренции Цели в области устойчивого развития Передовых технологий Мобильных приложений Спорта Туризма PATENTSCOPE Патентная аналитика Международная патентная классификация ARDI – исследования в интересах инноваций ASPI – специализированная патентная информация Глобальная база данных по брендам Madrid Monitor База данных Article 6ter Express Ниццкая классификация Венская классификация Глобальная база данных по образцам Бюллетень международных образцов База данных Hague Express Локарнская классификация База данных Lisbon Express Глобальная база данных по ГУ База данных о сортах растений PLUTO База данных GENIE Договоры, административные функции которых выполняет ВОИС WIPO Lex – законы, договоры и судебные решения в области ИС Стандарты ВОИС Статистика в области ИС WIPO Pearl (терминология) Публикации ВОИС Страновые справки по ИС Центр знаний ВОИС Серия публикаций ВОИС «Тенденции в области технологий» Глобальный инновационный индекс Доклад о положении в области интеллектуальной собственности в мире PCT – международная патентная система Портал ePCT Будапештская система – международная система депонирования микроорганизмов Мадридская система – международная система товарных знаков Портал eMadrid Cтатья 6ter (гербы, флаги, эмблемы) Гаагская система – система международной регистрации образцов Портал eHague Лиссабонская система – международная система географических указаний Портал eLisbon UPOV PRISMA UPOV e-PVP Administration UPOV e-PVP DUS Exchange Посредничество Арбитраж Вынесение экспертных заключений Споры по доменным именам Система централизованного доступа к результатам поиска и экспертизы (CASE) Служба цифрового доступа (DAS) WIPO Pay Текущий счет в ВОИС Ассамблеи ВОИС Постоянные комитеты График заседаний WIPO Webcast Официальные документы ВОИС Повестка дня в области развития Техническая помощь Учебные заведения в области ИС Поддержка в связи с COVID-19 Национальные стратегии в области ИС Помощь в вопросах политики и законодательной деятельности Центр сотрудничества Центры поддержки технологий и инноваций (ЦПТИ) Передача технологий Программа содействия изобретателям (IAP) WIPO GREEN PAT-INFORMED ВОИС Консорциум доступных книг Консорциум «ВОИС для авторов» WIPO Translate для перевода Система для распознавания речи Помощник по классификации Государства-члены Наблюдатели Генеральный директор Деятельность в разбивке по подразделениям Внешние бюро Вакансии Закупки Результаты и бюджет Финансовая отчетность Надзор
Arabic English Spanish French Russian Chinese
Законы Договоры Решения Просмотреть по юрисдикции

Республика Корея

KR028-j

Назад

Patent Court Decision, 2016Na1899, dated November 30, 2017

PATENT COURT OF KOREA

TWENTY-FIRST DIVISION

DECISION

Case No. 2016Na1899 Compensation for Employee Invention

Plaintiff, appellant-appellee A

Defendant, appellee-appellant B Corporation

District Court’s Decision Daejeon District Court Decision 2012GaHap37415 rendered on July 6, 2016

Date of Final Trial August 31, 2017

Decision Date November 30, 2017

ORDER

1. Including the plaintiff's petition expanded herein, the District Court’s decision shall be amended as follows.

The defendant shall pay to the plaintiff the amount of KRW 257,006,469, plus interest:

A. at a rate of 5 percent per annum for an amount of KRW 32,967,529 from January 10, 2013 to July 6, 2016, and at a rate of 15 percent per annum for said amount charged from July 7, 2016 until it has been paid in full;

B. at a rate of 5 percent per annum for an amount of KRW 17,532,471 from January 10, 2013 to November 30, 2017, and at a rate of 15 percent per annum for said amount charged from December 1, 2017 until it has been paid in full; and

C. at a rate of 5 percent per annum for an amount of KRW 206,506,469 from November 4, 2016 to November 30, 2017, and at a rate of 15 percent per annum for said amount charged from December 1, 2017 until it has been paid in full.

2. The appraisal cost among the total costs arising from this litigation and 90% of the total cost arising from this litigation between the parties other than the appraisal cost shall be borne by the plaintiff. The remaining costs of litigation not borne by the plaintiff shall be borne by the defendant.

3. In Paragraph 1 above ordering monetary payment, the portion that was not declared to be provisionally executable by the lower court may be declared provisionally executable.

PLAINTIFF'S DEMAND AND APPELLANT'S DEMAND

I. Plaintiff's Demand

The defendant shall pay the plaintiff the total amount of KRW 5,000,000,000 plus interest at a rate of 15 percent per annum charged from the day following service of the complaint until it has been paid in full.
(The plaintiff claimed a compensation of KRW 50,500,000 plus damages for delay in payment thereof in the lower court, and has expanded his demand in this court as stated above.)

II. Appellant's Demand

1. Plaintiff

The lower court's decision against the plaintiff specifying his obligations as stated below shall be revoked. The defendant shall pay the total amount of KRW 17,532,471 plus interest at a rate of 15 percent per annum charged from the day following receipt of petition until it has been paid in full.

2. Defendant

Among the decision(s) made at the lower court, the ruling against the defendant shall be revoked, and the plaintiff's claim corresponding to the decision(s) revoked shall be dismissed.

OPINION

1. Background

A. Positions of the Parties

1) B Corporation (a different company from the current defendant that has been spun off from B Holdings Corporation as shown below) is a company founded on October 22, 1968 to be engaged in the manufacture and sale of copper, copper alloy materials, and processed products.

2) B Corporation changed not only its proper purpose businesses to dominate and develop businesses of its subsidiaries by acquiring and holding shares thereof on July 1, 2008, but also its company name, to B Holdings (hereinafter referred to as 'B Holdings' including B Corporation before the change of company name). On the same day, B Holdings spun off its manufacturing business related to copper processing and special products to establish the defendant (hereinafter referred to as 'the defendant et al.' to designate the defendant together with B Holdings.).

3) The plaintiff joined B Holdings on September 10, 1993 and was assigned to jobs such as research and development, or quality control together with E who joined the company on October 9, 1988 (hereinafter referred to as 'the plaintiff et al.' when designating the plaintiff along with B). The plaintiff retired from the company on December 1, 2012.

B. Completion of Employee Invention at Issue and Patent Registration

1) On December 1, 1994, the plaintiff was appointed as the director of the materials development office at the Material Technology Research Institute located in B Holdings' F factory. On the same day, B was appointed as the chief director of said Material Technology Research Institute.

2) While working at the Material Technology Research Institute in B Holdings' F factory, the plaintiff et al. invented a "precipitate growth inhibiting high strength, high conductivity copper alloy and manufacturing process thereof" as an employee invention (hereinafter referred to as 'employee invention at issue’; further, each claim will be displayed in such way as ‘Claim 1 employee invention at issue') and succeeded the right to obtain a patent to B Holdings. B Holdings applied for a patent on said invention and obtained a registered patent as stated in the table below (hereinafter referred to as 'patent at issue’).

1) Title of invention: Precipitate growth inhibiting high strength, high conductivity copper alloy and manufacturing process thereof

2) Filing date of application / Date of registration / Registration number: December 8, 1995 / July 29, 1998 / Patent-0157257

3) Claims

Claim 1: Precipitate growth inhibiting high strength, high conductivity copper alloy which mainly consists of copper (Cu) and unavoidable impurities and contains 0.5 to 4.0 weight percent of nickel (Ni), 0.1 to 1.0 weight percent of silicon (Si), and 0.05 to 0.8 weight percent of tin (Sn), and whose precipitated particle size is no more than 0.5㎛

Claim 2: As to Claim 1 above, a precipitate growth inhibiting high strength, high conductivity copper alloy which contains 0.5 to 3.0 weight percent of nickel (Ni), and no more than 1 weight percent of iron (Fe) or cobalt (Co)

Claim 3: Process for manufacturing a precipitate growth inhibiting high strength, high conductivity copper alloy with precipitated particle size of no more than 0.5㎛, which involves producing through melting and casting an ingot that consists mainly of copper and unavoidable impurities plus 0.5 to 4.0 weight percent of nickel (Ni), 0.1 to 1.0 weight percent of silicon (Si) and 0.05 to 0.8 weight percent of tin (Sn), cold-rolling2) the ingot after face milling, cold-rolling it again after precipitation treatment1) for 5 to 12 hours at 450 to 502℃, and then tension-annealing it for no more than 90 seconds at 350 to 550℃

3) As to the patent at issue, the defendant completed the transfer of all rights consequential to spin-off on October 22, 2008.

C. Exploitation of Employee Invention at Issue

The defendant et al. have exploited Claim 1 employee invention at issue to produce PMC26, a copper alloy product consisting of copper, nickel, silicon, and tin. According to the catalog for the PMC26 product published by B Holdings in July 1999 (Plaintiff’s Exhibit 35), nickel (Ni), silicon (Si), and tin (Sn) account for 2.0%, 0.4%, and 0.4% respectively, and the remainder is accounted for by copper (Cu). 【Factual Basis】 Undisputed facts, statements in Plaintiff’s Exhibits 1, 2, 35, and 47, and Defendant’s Exhibits 2, 8, 9, and 35 (including multi-level numbers), and purport of the overall argument.

2. Occurrence of Obligation to Pay Compensation

A. Obligation to Pay Compensation

On comprehensive consideration of the above factual basis, as the employee invention at issue can be regarded as an invention related to the plaintiff's job in the scope of B Holdings' businesses during the plaintiff's service as an employee, and the plaintiff transferred his right to obtain a patent on his invention to B Holdings, B Holdings is obligated to pay compensation to the plaintiff pursuant to Article 40(1)3) of the old Patent Act (prior to amendment to Regulation No. 6411 on February 3, 2001; the same shall apply hereinafter).
Moreover, as the defendant who is spun off from B Holdings is jointly responsible for the liabilities of the mother company established before spin-off (Article 530-9(1) of the Commercial Act), barring special circumstances the defendant shall be obligated to jointly pay a compensation for employee invention as to the patented invention at issue to the plaintiff.

B. Defendant's Arguments and Discussion

1) Defendant's Arguments

As the employee invention at issue is such whose novelty is denied because said invention is practically identical to the prior art (Defendant’s Exhibit 10) or is such whose inventive step is denied because said technology can be easily invented by a person having ordinary skills in the pertinent art (hereinafter referred to as 'person having ordinary skills in the art'), the defendant has not gained any exclusive profits from the employee invention at issue, so the defendant is not obligated to pay any compensation for the employee invention to the plaintiff.

2) Legal Principles Needed for Discussion

Article 40(2) of the old Patent Act specifies the need to consider the degree of contribution by the employer and employee(s) to the completion of the invention and the amount of profits that the employer will gain from the invention when determining a fair amount of compensation to be awarded to the inventor-employee who has succeeded his or her invention to the employer. Also, Article 39(1) of the Act specifies that the employer has a royalty-free, non-exclusive license for the patent even if the employer does not succeed to the employee invention. Therefore, the aforementioned "profits that the employer will gain" refers to profits that can be gained by acquiring a position to exclusively exploit employee invention beyond a non-exclusive license. Meanwhile, unless there is a reason for patent invalidation, such as in the case where a patent-registered employee invention to which the employer has succeeded from the employee is a publicly known technology, or where said patented technology can be easily invented by a person having ordinary skills in the art using publicly known technologies, and the employer is deemed to gain practically no exclusive profit from the patent as a competing third party can easily know such circumstances, it shall not be allowed to avoid the obligation to pay the compensation for employee invention by indiscriminately denying the exclusive profits from the patent based only on the fact that a possible reason for patent invalidation exists, and such patent invalidation reason may be taken into account as an element of consideration when calculating the exclusive profits from the patent (refer to Supreme Court Decision 2014Da220347 rendered on January 25, 2017).

3) Whether the Novelty and Inventive Step of Claim 1 Employee Invention at Issue is Denied

A) Comparison of Claim 1 Employee Invention at Issue to Prior Art

B) Commonalities and Differences between the Inventions

As shown in Paragraph 1) above, Element 1 has the same components as the prior art and has a common numerical range of composition ratio for each component.

However, the prior art contains zinc (Zn) of 0.1 to 3 percent, iron (Fe) of 0.007 to 0.25 percent, and phosphorus (P) of 0.001 to 0.2% which are not explicitly contained in Element 2 (hereinafter referred to as 'Difference 1'). In addition, the prior art has no limit in precipitated particle size as in Element 3 (hereinafter referred to as 'Difference 2').

C) Easy Inventability

Through a comprehensive consideration of the circumstances shown below, unless determined in hindsight on the premise that the content disclosed in the specifications for the employee invention at issue is already known, it is hard to see that a person having ordinary skills in the art can easily invent Claim 1 employee invention at issue from prior art.

(1) Disclosure or Implication from Prior Art

Claim 1 employee invention at issue has its technical significance in producing a conductive copper alloy that has outstanding mechanical and physical properties such as flame resistance, high strength, and high conductivity, even if solution heat treatment5) is skipped, by adding 0.05 to 0.8 weight percent of tin (Sn) to Cu-Ni-Si-based alloy4) to restrain the generation and growth of precipitate and finely disperse precipitate (the size of precipitated particle is limited in Element 3).

However, as the addition of tin (Sn) to Cu-Ni-Si-based alloy in the prior art was intended to improve the springiness and bendability of Cu-Ni-Si-based alloy, it is hard to consider that the prior art discloses or implies the technical concept of Claim 1 employee invention at issue which is intended to improve the mechanical and physical properties of copper alloy such as flame resistance by adding tin (Sn) to Cu-Ni-Si-based alloy to restrain the generation and growth of precipitate and that a person having ordinary skills in the art can easily recognize said technical concept from the prior art.

(2) Predictability of Effect

Moreover, as shown in the table below, Claim 1 employee invention at issue shows an effect of delivering better mechanical properties such as tensile strength and spring strength compared to the prior art (figures in parentheses are median values). In addition, the aforementioned employee invention produces a flame resistance that maintains over 80% of initial tensile strength up to about 500℃. As stated above, Claim 1 employee invention at issue, which not only adds tin (Sn) but also limits the size of precipitated particles in Element 3, should be deemed as a new discovery of a specific property of the copper alloy that has not been recognized in the prior art, and cannot be diminished as an invention that only produces effects which are predictable from the prior art.

Therefore, Claim 1 employee invention at issue produces effects that are not predictable from the prior art.

(3) Ease of Composition Change

The prior art contains zinc (Zn), phosphorus (P) and iron (Fe) in addition to tin (Zn). However, given the specifications of the prior art stated below, said components appear to be essential to resolve challenges of the prior art or produce the intended property of alloy from the prior art, and thus omitting such components may damage the original technical significance of the prior art. Consequently, it appears to be difficult for a person having ordinary skills in the art to arrive at Claim 1 employee invention at issue easily.

(c) Zn
Although the Zn component improves the heat peeling resistance and mobility resistance of solder, the content has been determined to be in a range from 0.1 to 3% as such desired effect is not produced if the content is less than 0.1%, and solderability is damaged if the content exceeds 3%.

(d) Fe
Although the Fe component can not only improve the hot rolling property but enhance the plating heating adhesion by miniaturizing Ni-Si compound precipitation, which will improve the reliability of the connector, the content has been determined to be in a range from 0.007 to 0.25%, as such effect is not produced if the content is less than 0.007 and the heat rolling property deteriorates and conductivity is adversely affected if the content exceeds 0.25%.

(e) P
Although the P component restrains the deterioration of springiness resulting from the bending process and improves the insertability of a molded connector and mobility resistance, the content has been determined to be in a range from 0.001 to 0.2%, as such desired effects are not produced if the content is less than 0.001% and the heat peeling resistance is significantly deteriorated if the content exceeds 0.2%.

Meanwhile, as the specifications of Claim 1 employee invention at issue state that "Zn can be added up to 1 weight percent and P, Mg and Zr can be added up to 0.1 weight percent as a deoxidizer during the refining process (omitted)...In addition, during composition, Ni can be substituted with Fe or Co of up to 1 weight percent," thus zinc (Zn), phosphorus (P), and iron (Fe), which are the same components used in the prior art, can be added to the employee invention at issue. However, given that components other than nickel (Ni), silicon (Si), tin (Sn), and copper (Cu) are referenced as unavoidable impurities in Element 2 and the fact that a small amount of deoxidizer added in the process of melting casting to remove oxygen in the melted metal in order to prevent bubble defect combines with oxygen and is transformed into an oxide and almost does not remain in the metal at all, which is regarded as a technological common sense, it is hard to see that zinc (Zn) and phosphorus (P) components in Claim 1 employee invention at issue have the same technical significance as those components in the prior art.
Consequently, it is hard to see that the zinc (Zn) and phosphorus (P)-related composition in the prior art is practically identical to the composition in Claim 1 employee invention at issue, and it is also hard to see that removing zinc (Zn), phosphorus (P) and iron (Fe) components from the prior art by a person having ordinary skills in the art without any specific motive can easily lead to Element 2.

D) Summary

Therefore, the inventive step of Claim 1 employee invention at issue is not denied by the prior art.
In addition, on comprehensive consideration of circumstances set forth in Paragraph C) above, it is hard to see that Differences 1 and 2 are just an addition, deletion and modification of well-known and commonly used art in the specific means for resolving challenges and just subtle differences that are not sufficient to produce a new effect, which implies that both inventions cannot be deemed to be practically identical. Therefore, the novelty of Claim 1 employee invention at issue is not denied by the prior art.

4) Whether the novelty and/or inventive step of Claim 3 employee invention at issue is Denied

As Claim 3 employee invention at issue contains all the technical features of Claim 1 employee invention at issue, it can be said that the novelty and inventive step of Claim 3 employee invention at issue are not denied by the prior art unless the novelty and inventive step of Claim 1 employee invention at issue are denied by the prior art, as shown in Paragraph 3) above.

5) Summary

Therefore, it is difficult to say that there is any reason for invalidation as in the case that the employee invention at issue is such that is identical to publicly known technologies or can be easily invented by a person having ordinary skills in the art using publicly known technologies. Even if there is a reason for which the inventive step of the employee invention at issue is denied by the prior art, it is hard to find any evidence which demonstrates that the employer has gained practically no exclusive profit from the patent as a competing third party can easily access and know such circumstances.
Therefore, the defendant's argument that the defendant et all. are not obligated to pay the compensation for employee invention to the plaintiff because the defendant has gained no exclusive profit from the said invention on the other premise cannot be accepted.

3. Calculation of Fair Amount of Compensation

2. Summary of Plaintiff's Arguments

As the fair amount of compensation that the defendant is obligated to pay the plaintiff is calculated to be KRW 8,616,882,316 (KRW 689,350,585,341 of revenue × contribution rate of exclusive rights of 50% × royalty rate of 10% × inventor's contribution rate of 50% × plaintiff's contribution rate of 50%), the plaintiff claims KRW 5,000,000,000 as splitting of claims plus damages for delay in payment of said amount.

B. Calculation Criteria

1) Given that Article 40(2) of the old Patent Act specifies that "When determining the amount of compensation, the amount of profits that the employer will gain from the invention and the degree of the employer's contribution to the completion of said invention shall be taken into account. In addition, where the employee et al. presents a legitimate method for determination, such method shall be taken into account," what should be generally taken into account for calculating the amount of compensation for the employee invention pursuant to the regulation stated above should be ① profits that the employer will gain, ② employer's contribution rate, and ③ inventor's contribution rate.
In this regard, ① 'profits that the employer will gain' refers to the profits which are subject to distribution between the employer and the employee, and are limited to the profits for which there are a significant causal relationship with the patent. ② 'Employer's contribution rate' refers to the degree of contribution of what the employer has provided for completing the invention such as research and development expenses, research facilities, material expenses, salaries, etc. ③ 'Inventor's contribution rate' refers to the degree of the employee's efforts committed to completing the invention, which also means the degree of contribution by the plaintiff among the co-inventors.

2) However, as the employer has a royalty-free, non-exclusive license on the patent even if he does not succeed to the employee invention from the employee, 'profits that the employer will gain’ means the profits that the employer can gain by obtaining a position to exclusively exploit the employee invention, beyond the non-exclusive license. However, the 'profits that the employer will gain' means the profits generated from the employee invention itself, but does not mean accounting profits such as remaining operating incomes net of profits and expenses, which means that the employer should be deemed to have gained profits if there are any profits generated from the employee invention itself regardless of the accounting profits. In addition, even though the products that the employer is manufacturing and selling are not included in the scope of rights for the invention, if those products are such that can substitute the demand for the employee invention-applied products and the revenue of the company has increased by exploiting the patent right on the employee invention to prevent a competitor from exploiting the employee invention of the same kind, such profits can be regarded as the employer's profits originating from the employee invention (refer to Supreme Court Decision 2009Da75178 rendered on July 28, 2011).

3) On the other hand, in the event that only the employer exploits the employee invention and does not allow a third party to exploit it, the method to calculate the 'profits that the employer will gain' would be (i) calculation based on the amount equivalent to the expected royalty on the presumption that the employer allows a third party to exploit the employee invention, or (ii) calculation based on the revenue surplus compared to the reduced revenue expected if the employer allows a third party to exploit the employee invention.
The profits that the employer, or the defendant et al., will gain from the initial exploitation of the employee invention at issue to the expiration date of said patent shall be herein calculated according to the method that the plaintiff demands, specifically by multiplying the employer's revenue by a virtual royalty rate net of an amount subject to the exploitation of non-royalty license; in other words, a method of multiplying the exclusive right contribution rate.

Amount of compensation = ① Amount of profits that the defendant et al. has gained from the employee invention at issue (defendant's revenue × virtual royalty rate × exclusive right contribution rate) × ② Employee's (inventors') contribution rate (1 - employer's contribution rate) × ③ Plaintiff's contribution rate among co-inventors

4) However, as it is difficult to reach acknowledgment through strict and thorough verification on various factors set forth above, an appropriate amount should be determined based on the purport of the overall argument and the results of an investigation of the evidence.

C. Detailed Process of Calculating the Amount of Compensation

1) Amount of profits that the defendant et al. has gained from the employee invention at issue.

A) Sales of defendant's products to which the employee invention at issue is applied

On comprehensive consideration of statements in Plaintiff’s Exhibit 47, Defendant’s Exhibit 35 and 53 as well as the purport of the overall argument, the sales of PMC26 product by the defendant for a period from 1998 to 2015 have totaled KRW 689,350,585,341 as stated below (there is no particular dispute on this between the parties).

B) Virtual Royalty Rate

(1) Detailed Calculation

As shown in Paragraph 2-B above, the technical significance of the employee invention at issue lies in its method of production of a conductive copper alloy with outstanding mechanical and physical properties even without solution heat treatment by restraining the generation and growth of precipitate to finely disperse it. Given that the defendant et al. came to produce PMC26, an automotive connector, using the employee invention having such technical significance, and has achieved a surge in sales sufficient to substitute competitive overseas products [Clause A above], it can be said that the employee invention at issue has delivered technical innovation of a significant level.
However, it is also obvious that competitors have been manufacturing and selling products having similar components and composition ratio to Claim 1 employee invention at issue (Defendant’s Exhibit 11, 12, and 45) and that the optimization of detailed processes as well as manufacturing expertise is necessary to produce products that are competitive in terms of yield and/or product quality even when using a manufacturing process to Claim 3 employee invention at issue is applied (it appears to be obvious that the defendant et al. has secured its competitiveness through years of optimization of detailed processes).
Given the relevant circumstances as described above, such as the degree of technical innovation originating from the employee invention at issue, improved effects, objective technical value, exploitability and profitability, the proper virtual royalty rate for the employee invention at issue appears to be around 2%.

(2) Defendant's Arguments and Discussion

(A) Defendant's Arguments

G Industries, Inc (hereinafter G), the defendant's US corporation, has entered into a license agreement with H Co., Ltd. for manufacture and sale of MAX251C in the Americas and agreed to pay a royalty (JPY 20,000,000 + JPY 8 per kg of production) (Plaintiff’s Exhibit 45). When calculating the royalty for about 76,000 tons of PMC26 product manufactured and sold from 1998 to 2015 according to the above calculation formula, the amount of royalty calculated turns out to account for about 0.91% of the total revenue. As said royalty is calculated on the premise of transfer of manufacturing technologies, the virtual royalty should be lower than said royalty.

(B) Decision

Given that no royalty has been paid as production pursuant to said agreement has never been carried out, as was argued by the defendant, it doesn't seem to be reasonable to apply a formula for royalty based on the premise of exploiting a patent in an overseas country, where no royalty has been paid due to there being no production, to this case that involves a large scale of sales equivalent to about KRW 689 billion, and it seems even more unreasonable when considering the circumstances mentioned above.

Therefore, it is not sufficient to overturn the decision on acknowledgment of virtual royalty set forth in Paragraph (1) above only with the statement in Plaintiff’s Exhibit 45.

C) Exclusive Right Contribution Rate

(1) Exploitation of Employee Invention at Issue

There is no dispute between the parties with regard to the fact that the defendant has manufactured and sold PMC26 product, exploiting Claim 1 employee invention at issue. Meanwhile, the defendant et al. has modified the manufacturing procedures several times while in the process of manufacturing PMC26 product (Plaintiff’s Exhibit 6, 9, 28 and 35 and Defendant’s Exhibit 38-1) and has changed the sequence of the process to differ from Claim 3 employee invention at issue, even adding a solution heat treatment process which is not included in the claims set forth herein. However, even if the production process of PMC26 is not included in the scope of rights on Claim 3 employee invention at issue, it can be deemed that at least the PMC26 product can substitute the demand for other products which use the production process to which Claim 3 employee invention at issue is applied and the employer has exploited the patent right on Claim 3 employee invention at issue to prevent competitors from exploiting said employee invention, resulting in a surge in the defendant's sales. Therefore, the profits originating therefrom can be deemed as such that the employer has gained from the exploitation of said employee invention.
However, as it is difficult to separate the profits originating from Claim 1 employee invention at issue from those originating from Claim 3 employee invention at issue, because both profits originated from the manufacture and sale of the same product, a single exclusive right contribution rate should be determined in consideration of the aforementioned circumstances.

(2) Detailed process of calculating exclusive right contribution rate

(A) The circumstances listed below are factors that increase the exclusive right contribution rate.

i) As shown in Clause B) above, it can be said that the employee invention at issue has delivered a significant level of technical innovation.

ii) The defendant has achieved about KRW 689 billion in sales through the exploitation of the employee invention at issue.

(B) The circumstances listed below are factors that limit the increase of the exclusive right contribution rate.

i) Other competitors have been manufacturing and selling products having similar components and composition ratio to Claim 1 employee invention at issue (Defendant’s Exhibit 11, 12, and 45).

ii) Even when using the manufacturing process which is based on Claim 3 employee invention at issue, it is obvious that manufacturing expertise and optimization of specific processes are necessary to produce competitive products in terms of yield and product quality. It appears to be obvious that the defendant et al. has secured its competitiveness through years of optimization of detailed processes (Defendant’s Exhibit 17, 24, and 44).

iii) The defendant has modified the manufacturing procedures several times while in the process of manufacturing PMC26 product (Plaintiff’s Exhibit 6, 9, 28, and 35 and Defendant’s Exhibit 38-1) and has changed the process sequence to differ from Claim 3 employee invention at issue or even added a solution heat treatment process which is not included in the claims set forth herein.

iv) It is deemed that not only the technical features of the employee invention at issue but also the defendant's status in the market, reputation, sales network, brand awareness, customer attraction, and promotional and marketing activities have significantly contributed to the surge in sales. In particular, given that the exclusive right contribution rate should be calculated based on the sales surplus identified through a comparison with presumed sales in a given situation in which the employer exploits the employee invention based on a royalty-free, non-exclusive license on it, it is obvious by experience that the contribution of the defendant et al. who have an exclusive status in the relevant market would be significant (however, specific circumstances should be also taken into account; for example, the defendant's market share in the copper rolling market as of 2016 was 48% (Defendant’s Exhibit 45)).

(C) Summary

Through a comprehensive consideration of the circumstances mentioned above, the exclusive right contribution rate for the employee invention at issue should be around 15%.

D) Summary: Calculation of the Amount of Profits that the Defendant Will Gain

Therefore, the amount of profits that the defendant et al. will gain from the employee invention at issue is calculated to be KRW 2,068,051,756 (= Defendant's product sales of KRW 689,350,585,341 × virtual royalty rate of 2% × exclusive right contribution rate of 15%; amounts less than KRW 1 are rounded down).

2) Employee's (inventors') contribution

A) The circumstances listed below are factors that increase the employee's contribution.

i) The plaintiff, who joined B Holdings after obtaining a doctorate degree in metal engineering, came to accomplish the employee invention at issue while performing research and development activities as the director of the materials development office, and such employee invention at issue was accomplished through continuous experiments and research efforts based on the plaintiff's expertise and experience in copper alloy, as a researcher capable of performing independent research activities.

ii) It appears to be true that the plaintiff played a leading role in selecting the research subject(s) related to the employee invention at issue.

B) The circumstances listed below are factors that limit the increase of the employee's contribution.

i) Given that the defendant et al. have been developing technologies for Cu-Ni-Si-based copper alloy such as PMC102 or 102M before the completion of the employee invention at issue and the manufacturing process of PMC26 is significantly similar to that of PMC102 (Plaintiff’s Exhibit 8-2), such accumulated technologies belonging to the defendant et al. appear to have had a significant influence on the completion of the employee invention at issue.

ii) Repetitive experiments and evaluations seem to be necessary to complete the employee invention at issue, and it is obvious by experience that human and material resources belonging to the defendant had been committed in the process of employee invention. In particular, it seems obvious that highly expensive equipment was necessary to perform such experiments and evaluation due to the nature of such technical sector.

C) Summary

On comprehensive consideration of the circumstances mentioned above, the employee's contribution to the employee invention at issue should be around 25%.

3) Plaintiff's Contribution Rate

As the plaintiff et al. have jointly completed the employee invention at issue, it would be reasonable to set the plaintiff's contribution rate to 50%.

4) Summary: Calculation of the Amount of Compensation for Employee Invention

Therefore, the fair amount of compensation for the plaintiff's employee invention is calculated to be KRW 258,506,469 (= amount of profits gained by the defendant et al. of KRW 2,068,051,756 × employee's (inventors') contribution rate of 25% × plaintiff's contribution rate of 50%; amounts less than KRW 1 are rounded down).
If this is so, barring any special circumstances, the defendant is obligated to pay the plaintiff KRW 257,006,469 ( = 258,506,469 - 1,500,000) plus damage for delay in payment, subtracting KRW 1,500,000 that was previously paid from B Holdings to the plaintiff as a compensation for employee invention, which is also acknowledged by the plaintiff, from KRW 258,506,469..

4. Discussion on the Defendant's Arguments with regard to Extinctive Prescription

As the opinion that is to be stated herein by the Court is the same as what is stated in Paragraph 5 of the OPINION Section of the lower court's decision, such statement shall be granted pursuant to Article 420 of the Civil Procedure Act.

5. Conclusion

A. Therefore, the defendant is obligated to pay the plaintiff KRW 257,006,469 plus; ① interest at the legal rate of 5% per annum, as specified by the Civil Act, for the amount of KRW 32,967,529 granted by the lower court among the aforementioned amount from January 10, 2013, the day following delivery of the complaint as demanded by the plaintiff, to July 6, 2016, the date of court decision on which it was acknowledged that the defendant's resistance against the existence or scope of its obligations was significant, and interest at the legal rate of 15% per annum, specified by the Act on Special Cases Concerning Expedition, Etc. of Legal Proceedings, for the same amount from July 7, 2016 until it has been paid in full; ② interest at the aforementioned legal rate of 5% per annum for KRW 17,532,471 additionally granted by this court (KRW 50,500,000 claimed in the lower court - KRW 32,967,529 granted by the lower court) from January 10, 2013, the day following delivery of the complaint as demanded by the plaintiff, to November 30, 2017, the date of court decision on which it was acknowledged that the defendant's resistance against the existence or scope of its obligations was significant, and interest at the aforementioned legal rate of 15% per annum for the same amount from December 1, 2017 until it has been paid in full; ③ interest at the aforementioned legal rate of 5% for the remaining KRW 206,506,469 (257,006,469 - 32,967,625 granted by the lower court - 17,532,471) from November 4, 2016, the day following delivery of the application for amendment to plaintiff's demand and cause of action dated November 1, 2016, to November 30, 2017, the date of the court decision on which it was acknowledged that the defendant's resistance against the existence or scope of its obligations was significant, and interest at the aforementioned legal rate of 15% per annum for the same amount from December 1, 2017 until it has been paid in full.
B. The plaintiff's petition for this case is well grounded and therefore shall be granted. The plaintiff's other petitions are without merit and are therefore dismissed. As the lower court's decision that are partially NOT consistent with the decision herein is erred, the plaintiff's petition expanded in this court shall be partially granted and therefore, the lower court's decision shall be amended as stated in Paragraph 1 of the ORDER herein.

Presiding Judge Hwansoo KIM

Judge Jootag YOON

Judge Hyunjin CHANG


1)1) Precipitation refers to a phenomenon in which the tissue component is separated from a solid solution (solid mixture in which alloy elements are uniformly mixed), and a manufacturing process to induce precipitation is referred to as precipitation treatment

2)2) Process of pressing a copper alloy coil through a roller at room temperature to spread it thinly

3) An employee or executive of a corporation or public official shall have a right to be fairly compensated if he or she transfers his or her patent or a right to obtain a patent for an employee invention according to a written agreement or job regulations, or sets an exclusive license.

4) A kind of copper alloy, which is developed by US-based Corson and is comprised of Cu, Ni, and Si. It is also called Corson alloy, but will be referred to as Cu-Ni-Si-based alloy hereinafter.

5) Solution refers to a phenomenon in which a metal changes into a solid state. Partial solution occurs naturally in the hot rolling process while manufacturing copper alloy, but triggering an additional solution through heat treatment at a high temperature will deliver better properties in the precipitation treatment process which takes place afterwards, producing materials with improved machinability, which is called solution heat treatment.