The House of Councilors passed a bill into law on Friday allowing companies to obtain patents on inventions by their employees — more than a decade after Nobel Prize winner Shuji Nakamura launched a lawsuit against his company over the invention of the blue light-emitting diode.
The amendment, the first in more than 90 years, will help reduce the litigation risks for companies.
In 2001, Nakamura, winner of the 2014 Nobel Prize in Physics for inventing the blue LED with two other Japanese scientists, set a precedent for individual intellectual merit by suing his employer, Nichia Corp., to claim reasonable compensation for the 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. After a long legal battle, a rare ¥840 million settlement was reached.
He was initially rewarded ¥20,000 for the patent.
At a news conference held in Santa Barbara, California last October, Nakamura said he chose to relocate from Japan to the United States because researchers there are given a lot of freedom and everybody has a chance to succeed if they work hard.
Under the current system, patent rights of an employee’s invention belong to the employee and companies that want to cash in on employee inventions through patents must first take over the rights by providing “reasonable remuneration” to the employee. But Japan Inc. has voiced concerns that they would be forced to provide a large sum of remuneration.
With the revision, patent rights will belong to the companies if they have informed the employees beforehand, including in the company’s work regulations. Companies that obtained patents for inventions by employees will be required to give appropriate rewards in accordance with the Japan Patent Office’s guidelines.
The bill states that employees who invented products whose patents have been acquired by their employers are entitled to considerable compensation and economic benefits from the companies.
In a bid to avoid demotivating inventors at companies, the bill limits the scope in which the patent acquisition right can be transferred from employees to their companies.
The bill says that the right to obtain patents can be ascribed to companies only if they promise to reward employees for their inventions in internal rules or by other means.
Many major companies have internal rules on the transfer of the patent acquisition right to the companies from employees.
The patent office is expected to draw up the guidelines within the year. In them, the office will urge firms to introduce systems to receive objections from developers regarding rewards proposed by their employers.
The Upper House also passed a bill to revise the unfair competition prevention law, in order to tighten penalties on theft of trade secrets, such as product designs.