I. Amendment of Article 35 of the Patent Law
Under Japanese Patent Law, an employee is entitled to receive a “reasonable remuneration” when he assigns his patent ownership to his employer or grants the employer an exclusive license of his patent rights. Under the old Article 35, the reasonable remuneration was determined based on the employer’s profits gained from the invention and the employee’s contribution.
Generally, however, for the lack of an appropriate estimating system, gauging an employee’s contribution leading up to a successful invention and the employer’s profits generated by that invention is extremely difficult
Over the recent years, a number of lawsuits have been filed involving disputes about the substance of the “reasonable remuneration.” In the latest Nakamura v. Nichia case, the Tokyo District Court in January 2004 ordered Nichia to pay Nakamura JP¥ 20 billion (about Euro 140 million) for his invention. The amount the court decided was incredibly huge beyond people’s wildest imaginations. No one in their right mind would have dared expect this magnitude of reward to an individual inventor. Ordinary people watched this turn of events in awe and amazement while corporate leaders saw it with alarm and dismay. The district court decision threw corporate Japan in utter disarray and heralded the dawn of a new era breaking the decades-old industrial relationship where sedulous, self-sacrificing workers traded loyalty for security.
The new age worker is quickly catching on that time is now ripe to get ready to figure out their worth and start trading talent for money. It is a monition that management needs to get a good reality check now and then to stay out of a potential legal pitfall, but the growing legal menace came out of the blue that hardly gave them time to sit down and work out feasible incentive programs that take in a system for awarding reasonable remunerations for in-house inventions.
Most companies severely feel that they are in unpredictable environments and have trouble balancing a competitive level of profitability and compensation for the lack of visibility into actual costs involved. Unpredictability is an avenue toward decline in research, the intrinsic part of corporate responsibility and profit center.
The amendment is designed to give a new basis to “reasonable remuneration” and help promote and give visibility to employer-employee relations in terms of compensations associated with in-house inventions
According to new Article 35, reasonable remuneration is defined as such remuneration as specifically provided by contract or any other stipulation that forms an agreement between the employer and employee, where the remuneration is justifiable and fair based on the circumstances or the negotiation process leading to such agreement.
For detailed discussion of the amendment of Article 35, please click here, “Employee Invention in Japan.” |
