IP NEWS FLASH Payment of 163 million yen Ordered as Reasonable Remuneration For Employee Invention in Hitachi Patent Lawsuit

The Japanese Supreme Court recently ordered Hitachi Co., Ltd. to pay approximately 163 million yen to Seiji Yonezawa, a former employee of the company, as compensation for his inventions relating to light pickup technology used in compact and other optical discs. The amount equals $1.5 million. The ruling on October 17, 2006 resulted from a lawsuit originally filed by Mr. Yonezawa in the Tokyo District Court demanding reasonable remuneration for his 3 inventions now used in audio equipment worldwide.

The Tokyo District Court had originally ordered the payment of approximately 35 million yen or $300,000 by Hitachi. However, the Tokyo High Court, on appeal, recognized that Yonezawa should also be compensated for the amount Hitachi benefited through royalties and patent licensing fees overseas. They calculated that Hitachi's overall earnings from Yonezawa's inventions- both domestic and abroad- was closer to 1.18 billion yen. Defining the inventor's contribution at 14%, the court ruled that the reward  should amount to 165 million yen. After subtracting the estimated 2.3 million yen in incentive amounts already paid,  they ruled that Hitachi should pay the resulting 163 million yen, or $1.5 million, as reasonable remuneration to the former employee.

This is the second largest sum awarded to an employee-inventor  following the high-profile case of Shuji Nakamura who was awarded 60.4 billion yen for his blue LED invention in 2004.

Japan is the only country among developed nations where employee lawsuits involving crucial inventors has been rising. This is said to be because of a statute in the Japanese Patent Law that states that "employers must pay employee-inventors reasonable remuneration separate from his or her salary" without clearly defining what "reasonable remuneration" is.  Now that the traditional lifetime employment system is no longer the standard, employees who have previously kept quiet so as not to jeopardize a guaranteed job for life, are now feeling emboldened to turn to the courts to settle their complaints. 

Copyright ⓒ [2006] [Keisen Associates], All rights reserved