CFMoto is a Chinese manufacturer of ATVs, motorcycles and other kinds of automobiles. Chen and Rong were two individuals who had been employed by CFMoto since about 2010. In July and September 2018, they left CFMoto and joined Segway successively. In 2019, Segway filed for a patent application for a utility model titled “Air filter and all-terrain vehicle with same” (hereinafter referred to as “the patent”). The application proceeded to grant in 2020, with Chen and Rong named as the first and second inventors, respectively. CFMoto (hereinafter “the plaintiff”) sued Segway, Chen and Rong in seek of a declaration that CFMoto was the true owner of the patent. The plaintiff complained that Rong was the chief individual responsible for a vehicle development project to, among other things, formulate designs and research plans, coordinate the research teams and supervise their daily work progress. A series of evidence were submitted to demonstrate that Rong and Chen were the receivers or senders of emails enclosing engineering drawings for air filters and the parts. They also signed a number of the drawings as the document creator or the proofreader. The application for the patent in dispute was filed within one year of their leaving the plaintiff.

  The Suzhou Intermediate People’s Court heard the case, finding that the patent was irrelevant to the plaintiff’s model.[1] In China, a service invention refers to (1) an invention made in the course of an employee’s performance of the assigned work; (2) an invention made in the performance of tasks in addition to the assigned work; or (3) an invention in connection to the work assigned under the previous employment and performed within a year of termination of employment or transfer from the previous post. In the present case, Rong and Chen involved only partially in the research project for ATV-used air filters. Rong was more of a project manager and the plaintiff’s model was missing several features as claimed in the patent. A study of the technical fields of the patent and the plaintiff’s model confirms that they both indeed involved air filters. However, regarding technical problems and their solutions, the patent put forward an integrated inlet to resolve the issue of the air filter having a shorter lifecycle and being costly to maintain due to its comprising multiple parts which are difficult to accurately fit, assemble and seal. By contrast, the plaintiff did not solve the above technical problem. In fact, the plaintiff’s model itself embodied prior art in the background of Segway’s invention. Hence, the court concluded that the contested invention had not been created by the plaintiff or its research team. The plaintiff appealed.

  The Supreme People’s Court as the appellate court stressed that the main query in this ownership dispute was whether the patent was relevant to Rong and Chen’s assigned duties or tasks during their employment with the plaintiff to such an extent that the patent represented a service invention arising from work performance.[2] In the interpretation of the SPC, the law of service invention ownership should not be construed so broadly that it illegitimately restricts the horizontal mobility of a workforce or the carrying out of new technical research events. To figure out whether an invention relates to the previous employment, the SPC opined that several elements must be carefully investigated:

  1. The characterization of the invention: the invention’s technical field, the technical problems to be solved, the purpose and the technical effects, the claimed scope of the invention, and the substantive features as compared to the prior art, among other things.

  2. The details of the previous employment: the job responsibilities, the level of employment, the actual ability to control or acknowledge the technical information related to the patent, and the relationship between the patented invention and the assigned works or the job responsibilities.

  3. Whether the substantive features or ideas for improvement are presented in the former employer’s models/products, or whether the patented invention reveals derivation or advancement originating from the former employer’s models/products.

  Having set forth the elements as the foregoing, the SPC conducted an analysis and found that the trial decision was correct. Firstly, the invention in dispute was an air filter which displayed the advantages of easy assembly, easy sealing, long intervals between maintenance and a long lifecycle. Secondly, the scope and responsibilities of Rong and Chen’s employment did not include the specific work of air filter research. There was insufficient evidence to ascertain that Rong and Chen had been assigned specific tasks involving the improvement of air filters. Thirdly, in the investigation of the plaintiff’s engineering drawings, it became clear to the court that the plaintiff’s model was unable to perform turning, the prevention of the intake of dust or debris at a particular section, or the defining of another component in a certain place, all of which the patented invention could perform. That is, the patented invention could not possibly have been derived from or created based on the plaintiff’s model.

  The SPC further added that, since there was no derivative relationship between the plaintiff’s model and Segway’s invention, it remained far-off to conclude that Rong and Chen had secretly transferred the documents to Segway on the mere basis of Rong and Chen’s signatures being on the drawings and the activities of sending and receiving emails which enclosed said engineering drawings. Before concluding, the SPC once again emphasized that the interpretation of the technical “relevance” between the patented invention and the contesting model was pivotal in an ownership dispute. In accordance with the policy purpose of the law of service invention ownership, the arbitrary crediting of the former employer with all automotive part inventions was not fair or reasonable. Doing so would have materially deprived a skilled worker of the constitutional right to work, restrained creativity by curbing the mobility of innovative talents, and brought about an imbalanced share of interests in the triangle of the former employer, the current employer and the employee.

  The lower court’s decision was affirmed. Thus, the case was concluded and final that the utility model patent remained at Segway.

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