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China proposes law change to encourage commercialisation of inventions

China may give greater incentives to inventors within universities by raising the minimum reward for commercial exploitation to 50%, state-owned news agency Xinhua said27 Aug 2015

A revision to China's law on "Promoting the Transformation of Scientific and Technological Achievements" would allow state-owned research institutes and universities to transfer or license the use of their discoveries, or invest in them. At least half of the value of the invention would be paid to contributing scientists, Xinhua said.

In the past, any gains would have gone to the Chinese treasury, Xinhua said. The aim of the change is to reward the best scientists and find future research, it said.

A bill on revising the law has had a second reading at the standing committee of the National People's Congress (NPC). When it was read the first time, the minimum reward was given was 20%, but this has been changed after discussions with the NPC's Education, Science, Culture and Health Committee, many lawmakers and some local organisations, Xie Jingrong, deputy head of the NPC's law committee told Xinhua.

Shanghai-based education expert William Soileau of Pinsent Masons, the law firm behind Out-Law.com said: "This is an important update of the original law, which dates back to 1996. The 50% royalty is a bit of a red herring, because that royalty rate will only apply if the commercialising organisation doesn't have its own compensation policy in place. Still, the benefits for inventors and their organisations could be significant. Overall, the revised law helps strike a better balance between the interests of government, publicly-funded research organisations, their researchers, and society at large. The commercialisation of publicly funded research is an important potential catalyst for economic growth in China as elsewhere, so we expect China's policymakers to continue to refine policy and practice in this area."