RMB ChinaThe newest draft revisions to China’s patent law is a reminder of the importance of understanding the legal nuances when entering a new market.

China’s patent law has provisions outlining the ownership of employee inventions and requirements for properly compensating those inventors when the invention is deemed to belong to the employer. While several European countries have sections in their patent laws dealing with this sort of situation, the U.S. has largely treated this relationship as a matter of contract for employers and employees to negotiate on their own.

Not surprisingly then, in comments to China’s State Council regarding the proposed changes to the patent law, several groups representing international companies expressed concerns about these provisions.

Some said that the draft appeared to narrow the definition of what constitutes a service invention that would belong to the employer, making it more cumbersome for companies to ensure that they will own the patents that result from their investments. Others suggested that the requirement that employees be “reasonably” compensated is vague, and may require employers to meticulously calculate the value of all their patents in order to comply with the law. And several stressed the importance of allowing market forces to dictate the ownership and compensation given for employee inventions, implying that these provisions restrict this freedom of contract.

U.S. companies are used to handling these issues via contracts or agreements with their employees, but as international markets grow in importance, they likely will encounter these types of new challenges with increasing frequency.