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JAPAN / PATENTS / EMPLOYEES' INVENTIONS

The Blue LED Patent Case

Shiro Mochizuki

AIPPI Journal, Vol 28 No 3, May 2003

This article reflects the debate in Japan on the handling of inventions resulting from corporate research and development: more specifically, the question of employees' inventions and, in particular, "the issue regarding ownership of such inventions and the issue of remuneration in the case that such an invention is assigned to the employer". The debate has been given a fresh impetus as the result of a recent court decision known as the Blue Light-Emitting Diode Case (Nakamura v Nichia Corporation). Much of the case turned on Section 35 of the Japanese Patent Law, under which an invention relating to the business of the employer and falling within the scope of the employee's duties is subject to the employer's right to a non-exclusive licence. The same section provides that the employer may have the right to obtain a patent in accordance with a contract or similar arrangement, in which case the inventor has the right to reasonable remuneration. The proceedings in the Blue LED Case were based on an invention by Nakamura, an employee of the Nichia Corporation. Nichia made a patent application and paid ¥20,000 by way of compensation to the inventor. Nakamura contested both the ownership of the patent and the amount of compensation paid. The article sets out the respective pleas by the plaintiff and defendant and sums up the issue before the court as, first, whether the invention was an employee's invention within the meaning of Section 35; second, if so, whether there had been an assignment of the right to obtain the patent; and, third, whether there had been an implied contract of assignment had been concluded. As a preliminary point, the court held that the level of reasonable remuneration was a matter for judicial decision, even where that level may have been specified in a contract or company regulation. Next, the court ruled that, notwithstanding Nakamura's assertion about the status of his work on the invention, the process "was invented during the working hours at Nichia, on the premises of Nichia, using Nichia's facilities and using the manpower of assistants who were employed by Nichia"; and that the invention was an employee's invention. The court further held that, on the facts of the case, Nakamura had assigned his rights to Nichia and that there was also an implied agreement between the two parties. The court reserved for further consideration the question of the level of remuneration. The article concludes that the court's ruling was reasonable and provided useful guidance to companies on the manner in which they regulated their employees' inventions. But the conclusion carries a warning that, if the litigation in the earlier Olympus Optical case can be regarded as a guide to the ultimate outcome of the Blue LED Case, a somewhat higher level of remuneration may be awarded by the court than the amount paid by Nichia. As the court said in the Olympus case, "the succession of the rights to an employee's invention can be decided unilaterally by the company in the company regulations or in other provisions; but the company may not unilaterally decide the amount of the reasonable remuneration…" [20096]