Lee International

On January 21, 2026, the Intellectual Property High Court (IPHC) issued a notable decision (Case No. 2021 Na 1015) in a dispute concerning compensation for an employee invention. The court held that an individual may still qualify as an “employee” for the purposes of employee invention compensation if he or she continues to provide substantial labor or services to the company even after formal resignation. This decision is significant because it provides further guidance on the criteria for determining “employee status” in employee invention compensation claims.

The case arose from a claim brought by a former researcher (“Researcher A”) against his former employer (“Company B”). While employed by Company B, Researcher A conducted research relating to 3G standard technology. Following his departure from the company, Company B filed patent applications in Korea and the United States based on inventions developed by Researcher A and subsequently obtained multiple patents (the “Patents at Issue”). Researcher A alleged that Company B had derived exclusive and substantial benefits from the Patents at Issue without providing appropriate compensation and therefore sought employee invention compensation from the company.

Under Article 40(1) of the former Patent Act, which was applicable in this case, an employee is entitled to claim compensation from the employer for an employee invention. The key issue was whether Researcher A could be regarded as an employee of Company B at the time the invention was completed. Company B argued that Researcher A was not entitled to compensation because the invention had been completed after he had left the company and had begun working as a university professor. The court, however, found that Researcher A had continued to provide services to Company B in a manner substantially equivalent to that of an employee even after his formal resignation, and therefore recognized his entitlement to employee invention compensation. In reaching this conclusion, the court relied on the following factors:

• Substantial provision of labor: Even after his resignation, Researcher A continued to report to Company B two to three days per week, performing the same research and development activities as before, and made multiple inventions that were assigned to Company B.
• Continued compensation: Company B continued to make regular payments to Researcher A for several years after his resignation.
• Employer’s statements and actions: In a declaration submitted to the United States Patent and Trademark Office (USPTO) regarding the Patents at Issue, Company B stated that Researcher A had remained continuously employed by the company at the time the employee inventions were made. In addition, at a technical symposium hosted by a corporate group that includes Company B, Researcher A was identified as being affiliated with Company B and was presented with a certificate of recognition.

The court further held that the term “employee” includes not only individuals formally employed under a labor or civil-law employment relationship, but also those who work for another person under a relationship substantially equivalent to employment. According to the court, employee status may be recognized where an individual continues to provide labor or services in practice, regardless of whether the relationship is formally continuous or contractually defined in advance.

This decision highlights the potential risks of employee invention compensation claims that may arise when companies continue to collaborate with former employees after their departure. In particular, it underscores that employee status is determined primarily by the substance of the working relationship and the actual provision of labor, rather than by the mere fact of resignation. The ruling therefore suggests that companies should carefully review their intellectual property ownership arrangements, compensation policies, and post-employment collaboration structures when engaging former personnel in research and development activities.

The case is currently pending before the Supreme Court, and its final outcome is being closely watched.