[2] In the case of an employee’s invention compensation computed pursuant to Articles 39(1) and 40 of the former Patent Act or Articles 2 subparag. 2 and 15 of the Invention Promotion Act, whether the amount within the scope permitted pursuant to Article 10(1) of the former Restriction of Special Taxation Act is subject to the tax credit for research and human resources development expenses (affirmative in principle)

[2] Articles 39(1) and 40 of the former Patent Act (amended by Act No. 7869 of Mar. 3, 2006) and Articles 2 subparag. 2 and 15 of the Invention Promotion Act provide that an employee invention falls under the scope of duties of an employer, a corporation, or the State or a local government (hereinafter “employee, etc.”) and the act of making the invention falls under the scope of duties of an employee, etc. and falls under the scope of duties of the employer, a corporation, or the State or a local government (hereinafter “employee, etc.”) and the amount of compensation shall be calculated in consideration of the amount of profit the employer, etc. gains from the invention and the degree of contribution of the employer, etc. to the completion of the invention (Article 15(2) of the Invention Promotion Act provides that where compensation is prescribed by employment regulations, etc., the amount of compensation shall be deemed reasonable in consideration of certain circumstances, and thus, the amount of compensation calculated within the scope of the employee invention under Article 18(1)1 of the former Act shall be deemed reasonable.

1. Article 10(1) of the former Restriction of Special Taxation Act (amended by Act No. 8146 of Dec. 30, 2006; hereinafter “former Restriction of Special Taxation Act”) provides that “where a certain domestic corporation has expenses for research and human resources development as prescribed by the Presidential Decree (hereinafter “research and human resources development expenses”) for each taxable year not later than the taxable year ending on or before December 31, 2006, it may be eligible for the tax credit for corporate tax by selecting one of the following methods, and Article 10(1) of the former Restriction of Special Taxation Act (amended by Act No. 8827 of Dec. 31, 2007; hereinafter “former Restriction of Special Taxation Act”) provides that “where the research and human resources development expenses are incurred for each taxable year ending on or before December 31, 2009, the amount under each of the following subparagraphs shall be deducted from corporate tax to be paid by the relevant domestic corporation pursuant to Article 10(1)6(1) of the former Restriction of Special Taxation Act (amended by Presidential Decree No. 10(hereinafter “Special Taxation Act”).

Article 9(2) [Attachment 6] subparag. 1(d) of the Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21064, Oct. 7, 2008; Presidential Decree No. 21064, Oct. 1, 2008; Presidential Decree No. 21065, Oct. 1, 2008; Presidential Decree No. 21065, Oct. 1, 2008; Presidential Decree No. 22006, Oct. 1, 2006; Presidential Decree No. 22134, Jan. 21, 2006; Presidential Decree No. 221358, Oct. 22, 2006; Presidential Decree No. 221358, Feb. 22, 2006; Presidential Decree No. 221358, Feb. 1, 2006; Presidential Decree No. 222010, Feb. 2, 20010).

In addition, Articles 39(1) and 40 of the former Patent Act and Articles 2 subparag. 2 and 15 of the Invention Promotion Act provide that an employee’s invention falls under the scope of duties of an employer, a corporation, or the State or a local government (hereinafter “employee, etc.”) and the act of making the invention falls under the scope of duties of an employee, etc., and is determined as an invention falling under the current or past duties of the employee, etc., and that the amount of compensation should be determined by considering the amount of profit the employer, etc. gains from the invention and the degree of contribution the employer, etc., including the employee, etc., to the completion of the invention (Article 15(2) of the Invention Promotion Act provides that where the compensation is prescribed by the employment regulations, etc., if the compensation is deemed reasonable in consideration of certain circumstances, the amount of compensation calculated in consideration of the above facts in relation to the employee’s invention meeting such requirements shall be deemed a legitimate compensation, barring special circumstances.

(4) On June 20, 206, the court below concluded a contract with the non-party on June 20, 206 that the non-party shall be paid 367,807,830 won as compensation for non-party succession to the right, and paid 1,727,00,000 won to the non-party on December 29, 206; ② on December 27, 2007, the plaintiff shall also be paid 179,254,000 won as compensation for non-party’s transfer of right; ② on December 27, 2007, the amount of compensation for non-party 179,254,000 won as compensation for non-party 20,000 won as compensation for non-party 40,000 won as compensation for non-party 20, 306, 406, 207, 407, 209, 407, 2004, etc.

Furthermore, the lower court determined that the instant disposition is lawful on the grounds that: (a) inclusion of the Nonparty, who is an employer, in the concept of “employee” as referred to in the instant provision, such as holding the Plaintiff’s shares of 55.33%, violates the legislative intent of the instant provision, i.e., facilitating research and development of employees through tax support; (b) there is no evidence to acknowledge that the invention related to patent, utility model, design, etc. was related to the Nonparty’s duties or was in the scope of the Plaintiff’s duties; and (c) the Nonparty established a non-exclusive license on the construction method of the Legal Protection Network (patent No. 2 omitted); and (d) the Nonparty transferred part of the said patent right to the Samsung Technology Foundation Co., Ltd. on September 13, 2007; (b) there is no evidence to deem the instant compensation to constitute “employee invention compensation” under the Invention Promotion Act; and (c) the instant compensation does not constitute an employee invention compensation under the instant provision.

3. However, we cannot agree with the judgment of the court below for the following reasons.

According to the reasoning of the judgment below and the evidence duly admitted by the court below, the plaintiff is a domestic corporation established for the purpose of construction work construction and design business, manufacturing of protective block for civil engineering, etc., the plaintiff is a non-party's invention for ground afforestation (patent number 1 omitted) is an invention for planting plants on the surface by spraying and constructing it by a simple construction method on the surface of a wall, sand surface, etc., which constitutes a sudden slope of various civil engineering works, or on the surface of a earth and sand surface, etc., which constitutes a sudden slope of a surface of a earth and sand, and the construction method of a legal surface protection net (patent number 2 omitted) is an invention for facilities installed on the surface of the law, etc. with a risk of a landslide for the purpose of protecting cars and preventing landslides. The non-party who was employed by the plaintiff in 1985, was promoted to a technical officer in charge of technology development or technology development, and the plaintiff's invention compensation is calculated based on the total sales amount of the plaintiff's invention as of January 1991.

Examining the above facts in light of the provisions and legal principles as seen earlier, since each of the instant inventions was made by the Nonparty, who was engaged in the Plaintiff’s technical research and development business during his/her service, with respect to civil engineering works and landscaping works that fall under the Plaintiff’s scope of business, there is considerable room to regard the invention as an employee’s invention under the former Patent Act or the Invention Promotion Act, and the Nonparty does not deem the invention as not an employee’s invention solely on the fact that the Nonparty established a non-exclusive license to a third party after the employee’s invention or transferred part of the patent right. Furthermore, since the Plaintiff’s employee’s employee invention provision provides compensation in accordance with certain standards, examining whether the amount of compensation for the Nonparty calculated based on the provision within the scope of reasonable compensation, if it goes beyond the scope, the excess amount should not be denied as the subject of

Nevertheless, solely based on the circumstances indicated in its reasoning, the lower court determined that the instant disposition, which denied the tax credit for research and human resources development expenses, deeming that the amount that the Plaintiff would pay to the Nonparty for the instant invention does not constitute an employee invention compensation as stipulated in the instant provision, was lawful. In so doing, the lower court erred by misapprehending the legal doctrine on employee invention compensation under Article 10(1) of the former Act as one of the objects of tax credit for research and human resources development expenses, thereby failing to exhaust all necessary deliberations, which affected the conclusion of the judgment

4. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-dae (Presiding Justice)