Harold Wegner, a partner at Foley & Lardner has an interesting article pondering the upcoming possible changes to Japanese Patent Law.  The Japanese "Article 35" has become in the news for the astonomical awards of money to employed inventors possible independent of any employment contract. Legislation has been approved by the Cabinet that is now under consideration and may be enacted in the April-May 2004 session that would change in the law so that employers and workers are encouraged to reach an agreement on the framework for compensation.

But, in Japan any such agreement does not block imposition of a judicial award for compensation under Article 35 if the award is "unreasonable".

If enacted, the new law would have no effect on inventions that have been previously commercialized which are now in litigation ? or which may be litigated in the coming years, subject to the ten year statute of limitations to bring suit.

The current Japanese patent law states that "[t]he employee shall have the right to a reasonable remuneration when he has enabled the right to obtain a patent or the patent right with respect to an employee’s invention to pass to the employer or has given the employer an exclusive right to such invention in accordance with the contract, service regulations or other stipulations." Japanese Patent Law ? 35(3); emphasis added.  The proposed law makes no change in this provision.

The determination of the amount of reasonable remuneration is given in Art. 35(5) and is just like the old method of Art. 35(4) of the current law, except for the preamble concerning an employment contract: "In a case where there are no provisions such as [an employment] contract *** [under Art. 35(4)], or otherwise the paying remuneration in accordance such provisions is considered unreasonable according to the preceding section, the amount of the remuneration under the preceding section shall be determined by reference: "To the amount of profits to be realized by the Employer from the invention; and "To burdens that come along with the invention on the Employer contribution by the Employer and compensation and benefits given to the employee, etc by the Employer".  This is essentially the same as the current law.

Left unanswered are questions such as:

What happens if the patent life unexpectedly becomes devalued due to noninfringing product or shortened due to invalidity.

Can an inventor get remuneration for an invention that has never been the basis for any licensing but is used to exclude others?

What if there is no license but a covenant not to compete?

Does it matter whether the license generating income is for an "invention" or for a "patent"?

Is an invention made by a Japanese national covered by Art. 35 or only if the person makes the invention in Japan? What happens if the inventor works for a foreign company? Does the location of the research facility matter?

Is there a right to remuneration for this invention that is not commercialized?

What about co-inventors who did not invent the technology where there are different inventors of different claims in a patent and that the critical technology that is licensed is in claims with less than all of the named inventors?

What to do with post-grant inventorship changes and disputes?

May an employer avoid compensation altogether by refraining from filing a patent application or by abandoning or forfeiting the application or patent?

As you can see, there are lots of questions that will need to be answered through some expensive litigation to work out the details of just how inventor compensation will work.  While it is expected to pass, there could be changes to the law given the publicity of the Shuji Nakamura case against Nichia.  In addition, it will be difficult for Japan to harmonize with U.S. and European laws if they continue down a path with their own provincial reward system.

See the entire article here.

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