The inventor of an LED technology has reluctantly agreed to a record settlement from his former employer in a dispute. Shuji Nakamura, now a professor at the University of California, Santa Barbara, will receive 840 million yen ($8.1 million) from his former employer, the Nichia Corporation, for inventing blue-light-emitting diodes. Nichia secured lucrative patents for Mr. Nakamura’s invention, which allowed the creation of more vibrant video billboards and traffic signal lights and helped lead to the development of blue lasers, which are used in the latest DVD players. His invention was also useful in creating white-light-emitting diodes, which may someday replace incandescent bulbs as a source of indoor lighting.

The case goes against the tradition that employees should sacrifice everything for their companies. Traditionally, in Japan, corporate engineers and scientists are treated just like less-skilled employees. It is unusual for Japanese companies to sign contracts with their researchers that specify how profits from their inventions will be shared, as is often the practice in American companies.

The amount of the settlement was significantly smaller than the $190 million the Tokyo District Court awarded inventor Shuji Nakamura in January as reasonable compensation.

By mandating that employee-inventors receive fair compensation for the value their inventions provide to their employer, Japanese patent law stands in stark contrast to its American counterpart. Japan’s fair compensation provisions have been on the books since 1959, but employee-inventors have only recently started to sue under these statutes.

Mr. Nakamura sued his former employer four years ago, seeking a share of the royalties from his invention after the company gave him an award of 20,000 yen, or less than $200, for his work.  See the entire article here.

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