An employee invention, in the Patent Act's sense, is one that falls within the employer's business and arises from the employee's current or past duties. Until 2016, the right to obtain a patent always started with the inventor, and the employer acquired it by transfer in return for reasonable remuneration. How much was reasonable became a matter for the courts, and some awards were very large.
The best-known case involved Shuji Nakamura, the inventor of the blue LED, who later shared the Nobel Prize in physics. In 2004 the Tokyo District Court ordered his former employer, Nichia, to pay 20 billion yen. The case was settled on appeal in 2005 for about 840 million yen including interest. The uncertainty such cases created pushed industry to lobby for change.
The 2015 amendment, in force from 1 April 2016, allows the employer to own the right from the moment the invention is made, provided its contract, work rules or other rules say so in advance. In return, the employee is entitled to a reasonable benefit, which may be money or another economic benefit such as paid study abroad or stock options. Whether the benefit is reasonable is judged mainly by the process: whether the employer consulted employees in setting the rules, disclosed the standards and listened to the inventor. Government guidelines describe what a fair process looks like.
What it means for a foreign employer
- Put the rule in writing in Japan. If your Japan entity's work rules or invention policy do not provide for employer ownership, the right starts with the employee. A global IP clause in an English contract may not be enough on its own.
- Run the process properly. Consult employees on the reward scheme, publish it and keep records of the consultation. The process is what protects you.
- Coordinate with head office. Rights made in Japan may need to be assigned on to the parent. Check the chain of title.
- Senior R&D hires will ask. Researchers moving from Japanese manufacturers know their rights and often compare reward schemes when weighing an offer.
Sources
- Patent Act, Article 35, as amended by Act No. 55 of 2015 (in force 1 April 2016).
- Japan Patent Office, guidelines on reasonable benefit under Article 35(6).
- Tokyo District Court, Nakamura v. Nichia, 30 January 2004; settlement at the Tokyo High Court, January 2005.