Hello, I am Sang-yoon Eom, attorney at Cheongchul Law Firm.

A significant portion of patents held by corporations are based on so-called 'employee inventions' (직무발명) made by employees in the course of their work. The calculation and payment of fair compensation to employees for such inventions frequently gives rise to disputes between employers and employees. Claims for employee invention compensation are particularly common after employees leave the company. Employers who lack clear understanding of (i) the legal nature of the compensation claim, (ii) when it can be exercised, and (iii) the starting point of the statute of limitations may face unexpected disputes. Conversely, depending on how the company's compensation rules are interpreted, an employee's rights may or may not be extinguished by prescription—a critical distinction.

In Supreme Court Decision 2025Da219742 (rendered June 24, 2026), the Court clarified that (i) provisions in the employer's compensation rules regarding forms of compensation, calculation criteria, and payment methods do not create a separate contractual claim distinct from the statutory claim under the Invention Promotion Act, but (ii) where such rules set the 'payment timing' through payment requirements or procedures, the employee may exercise the compensation claim when that payment timing arrives. Today we examine the key holdings of this decision and the practical implications for corporations and R&D personnel.

[Prior Case Law on the Legal Nature of Employee Invention Compensation Claims]

Article 2(2) of the Invention Promotion Act (발명진흥법) defines 'employee invention' as "an invention made by an employee, executive of a corporation, or public official (hereinafter 'employee, etc.') within the scope of their duties, where the nature of the invention falls within the business scope of the employer, corporation, state, or local government (hereinafter 'employer, etc.'), and the act of making the invention belongs to the employee's current or past duties." Article 15(1) of the same Act provides that an employee who transfers patent rights for an employee invention to the employer or grants an exclusive license has the right to receive fair compensation.

An employee's compensation claim for an employee invention is a statutory claim recognized for the policy purpose of encouraging employee inventions. Its statute of limitations is 10 years, the same as general claims, and it generally arises when the employer succeeds to the right to obtain a patent or the patent right itself from the employee (see Supreme Court Decision 2009Da75178, July 28, 2011). However, prior Supreme Court precedent has consistently held that where the employer has established work rules regarding employee invention compensation and stipulated payment requirements or procedures, the employee may exercise the compensation claim at the payment timing thus prescribed (see Supreme Court Decision 2021Da258463, May 30, 2024).

The issue arises when the employer's compensation rules relatively detail (i) forms of compensation (application compensation at filing, registration compensation at registration, disposition compensation at disposition, etc.), (ii) compensation calculation criteria (e.g., percentages of sales or licensing income), and (iii) payment procedures (deliberation and resolution by a compensation review committee), but do not explicitly include a timing clause stating 'when compensation shall be paid.' In such cases, questions arise as to whether (i) such rules alone create a separate contractual claim, or (ii) even if not, they can be deemed to establish a 'payment timing.'

[Holdings in Supreme Court Decision 2025Da219742

This case involved a claim by an employee plaintiff against the defendant employer corporation for compensation for an employee invention made during employment. The plaintiff sought (i) primarily, compensation as a statutory claim under Article 15 of the Invention Promotion Act, and (ii) alternatively, compensation as a contractual claim under the defendant's compensation rules, each as an explicit partial claim.

The lower court (i) on the primary claim, held that even if the defendant's compensation rules stipulated forms of compensation, criteria and payment methods for determining compensation amounts, and payment procedures, such circumstances alone could not be deemed to establish a payment timing for employee invention compensation or to create a legal impediment to exercising the claim. On that premise, it treated the plaintiff's compensation claim as a claim without a fixed maturity and accepted the defendant's statute of limitations defense. Further, (ii) on the alternative claim, it ruled that the defendant's compensation rules could not be interpreted as creating a separate new monetary claim for the employee.

The Supreme Court, however, partially reversed and remanded based on the following legal principles.

1. Legal Nature of the Compensation Claim

Where the employer's work rules specify forms of compensation and criteria/methods for determining compensation amounts, absent special circumstances, this should be interpreted as concretizing or supplementing the employee's statutory compensation claim under the Invention Promotion Act, and the legal nature of the compensation claim does not change as a result. That is, the Supreme Court's position is that the existence of compensation rules does not, in itself, create a separate contractual claim for the employee.

2. Establishment of Payment Timing and Time of Claim Exercise

However, where work rules concerning employee inventions set payment timing through stipulating payment requirements or procedures for the compensation, the employee, absent special circumstances, may exercise the compensation claim at the payment timing thus prescribed.

The Supreme Court noted that the defendant's compensation rules required, for each type of compensation, that when the payment requirements—such as "having transferred or licensed for consideration, or having obtained tangible benefits through exercise of rights"—were met, the corresponding compensation would be paid through payment procedures including deliberation and resolution by the employee invention compensation review committee. The Court held that this structure of compensation rules constitutes setting an 'indefinite-term payment timing' for the employee invention compensation, and that absent special circumstances, the plaintiff could exercise the compensation claim only when such payment timing arrived.

This holding is significant in that the statute of limitations for an employee invention compensation claim does not uniformly run from the 'time of patent right succession,' but must be determined by closely examining the specific content of the compensation rules and reflecting the purpose of establishing the payment timing.

[Practical Implications]

Some corporations have historically operated compensation systems that effectively subordinate the timing of exercising compensation claims to the company's procedural progress, by including only payment procedures in their compensation rules without explicit payment timing clauses. This decision suggests, however, that such structures may instead be interpreted as 'establishing an indefinite-term payment timing,' potentially delaying the starting point of the statute of limitations. In cases where the employer has delayed compensation review committee resolutions or failed to advance compensation procedures over long periods, the employer may find it difficult to escape compensation liability through a statute of limitations defense.

Employees who have made employee inventions must accurately understand the starting point of the statute of limitations for their compensation claims. If the employer's compensation rules stipulate payment requirements or procedures, prescription runs from the time those payment requirements are satisfied (e.g., sale of patent rights, granting of license, occurrence of tangible benefits from exercise of rights), not uniformly from the time the employer succeeded to the patent rights.

However, in light of this decision, it will be very difficult for an employee to argue that a separate contractual claim arises beyond the employer's compensation rules. Accordingly, employees should structure their compensation claim strategy around exercising the statutory claim under the Invention Promotion Act, while carefully examining whether the compensation rules establish a payment timing.

While this decision presents a new interpretive guideline on the key issue of the starting point of the statute of limitations in employee invention compensation disputes, it cannot be uniformly applied to all cases. Conclusions may differ depending on individual factual circumstances such as the specific language of the compensation rules, actual operational patterns of payment procedures, and circumstances of patent right succession. Therefore, when considering claiming or defending employee invention compensation, the safest course is to thoroughly analyze the compensation rules and actual operational materials in advance to accurately ascertain the prescription status of the claim.