The Cabinet adopted a bill on Friday that will see the ownership of patents moved from individual developers to their employers, in the first major change to the Patent Act in more than 90 years.
The bill is scheduled to be submitted to the current Diet session which runs through June 24, with the government aiming to enforce the revised law starting in 2016.
To prevent employers from unjustly slashing rewards for individual inventors and to avoid legal fights between them, the government will ask employers to work out compensation systems for patent developers, officials said.
The revised bill stipulates that the ownership of patents belongs to the employer if the company notifies workers of the matter in advance, but that it belongs to individual inventors if they were not informed of company rules.
To keep workers motivated, the bill also says patent inventors have the right to receive a "considerable amount of rewards and other economic benefits" for their inventions, urging employers to work out a system to reward individual developers.
Shuji Nakamura, one of the three Japan-born scientists awarded the 2014 Nobel Prize in Physics for inventing energy-efficient blue light-emitting diodes, has fought a legal battle with his former employer, Nichia Corp., over the patent rights to his invention.
In 2004, the Tokyo District Court ordered Nichia,which is based in Tokushima Prefecture, to pay ¥20 billion (about $164 million) to Nakamura for his invention.
Nichia and Nakamura reached a settlement in 2005, with the company agreeing to pay him some ¥840 million.