1. Recent Decision(s) relating to Employee Inventions
2015 AIPLA Mid-Winter Institute
IP Practice in Japan Committee Pre-Meeting Seminar
Recent Decision(s) relating to Employee Inventions
January 27–28, 2015
Orlando, Florida
JPAA International Activities Center
Kaoru KURODA

2. Table of contents History of Invention Act
Amounts of value awarded by the Court in 2014
Nomura Case (Tokyo Dist. Ct., Oct 30, 2014) 2

3. Invention Act Previous Act (Since 1959） Present Act (2004 revision） ?
(Article 35 of Japanese Patent Law)
Previous Act (Since 1959）
Present Act (2004 revision） ? 3

4. Previous Act (before 2004 revision）
Invention Act
Previous Act (before 2004 revision）
An employee (=inventor) originally obtain a right to obtain a patent.
An employer has a non-exclusive license on the patent for free (Art. 35(1)).
If the employee transfers the right to obtain a patent to the employer, the employee has the right to receive reasonable value from the employer (Art. 35(3)). 4

5. April 22, 2003, Supreme Court Decision
Invention Act
April 22, 2003, Supreme Court Decision
“Even though an employment regulation has a provision dealing with the value for the employee invention to be paid to the employee, if such value is less than ‘reasonable value’ determined under Article 35(4), the employee can seek payment of the shortfall under Article 35(3).” 5

6. Invention Act Present Act (2004 revision） The same
If an employment regulation etc. provides for the reasonable value, the payment of such value in accordance with the provision shall not be considered unreasonable in light of the following circumstances: 6

7. Invention Act Present Act (2004 revision） (cont’d)
where a negotiation between employer and employees had taken place in order to set standards for the determination of the said value,
where the set standards had been disclosed,
whether the employee’s opinion on the calculation of the amount of the value had been heard, and
any other relevant circumstances. 7

8. Invention Act Previous Act Present Act
If a right to obtain a patent was transferred before Apr. 1, 2005.
Previous Act
Present Act
If a right to obtain a patent was transferred on and after Apr. 1, 2005. 8

9. Amount of reasonable value determined by the Court in 2014
Defendant
Technology
Payment (yen)
Claimed Amount (yen)
Awarded
Amount (yen)
Date
Decos Corporation
insulation
267 M
(1,235 M)
Apr. 18
Sakura enterprise
optical imaging
14 M
20 M
Apr. 22
Ricoh
signal setting
5 M
500 M
(31,133 M)
7.4 M
Jun. 20
Conglo Engineering
foundation engineering
30 M
(290 M)
9.8 M
Jun. 26
HOYA Corporation
optical element
24 K
100 M
Sep. 25
Oki Electric Industry
resin seal mold
163 K
6,738 M
0.5 M
Oct. 29
Nomura Securities
data transfer
200 M
(28,691 M)
Oct. 30 9

10. Nomura case (Tokyo Dist. Ct., Oct 30, 2014)
The first case reviewed under the Present Act.
Defendant “Nomura Securities” is a securities firm in Japan.
Amount claimed by Plaintiff is 200 million yen (the total amount is 28,691 million yen).
Amount awarded by Court is zero. 10

11. Nomura case: Facts (Tokyo Dist. Ct., Oct 30, 2014)
The invention was filed only in the U.S. However, patent is not granted due to lack of novelty.
Defendant has two employment regulations (Regs. 1 & 2) which deal with employee invention.
Nomura did not pay “incentive fee” to the employee. 11

12. Nomura case: Facts (cont’d) (Tokyo Dist. Ct., Oct 30, 2014)
Nomura’s Employment Regulations:
Reg. 1:
Nomura will pay incentive fee to the employee who transferred a right to obtain a patent, when (i) the patent is filed; (ii) the patent is granted; and (iii) Nomura receives monetary benefit by exercising the invention.
Reg. 2:
(i) 　　 30,000 yen
(ii) 　 100,000 yen
(iii) only if the patent is granted, “Patent Conference Board” will determine. 12

13. Nomura case (Tokyo Dist. Ct., Oct 30, 2014)
How to deal with the case under the present act
Is the provision in the regulations regarding the value for the employee invention is reasonable?
The payment of such value is considered reasonable
Yes No
Determine the amount of the reasonable value 13

14. Nomura case (Tokyo Dist. Ct., Oct 30, 2014)
Court found …
Negotiation between employer and employee?
⇒ No.
Disclosure? ⇒ Reg. 1, yes. Reg. 2, no.
Employee’s opinion had been heard? ⇒ No.
Any other relevant circumstances?
⇒ No circumstance as alternatives to i-iii.
v. Is the incentive fee higher than average
⇒ No
The provisions are unreasonable 14

15. Nomura case (Tokyo Dist. Ct., Oct 30, 2014)
How to deal with the case under the present act
Is the provision in the regulations regarding the value for the employee invention is reasonable?
The payment of such value is considered reasonable
Yes No
Determine the amount of the reasonable value 15

16. Nomura case (Tokyo Dist. Ct., Oct 30, 2014)
Conclusion
Because the patent is not granted, the employer’s profit for exclusivity presumably does not occur. The plaintiff did not prove otherwise.
The study results related to the patent have been published. Thus, the Court found that the employer’s profit for exclusivity has not occurred.
Therefore, the value is zero. 16

17. Comments
Contrary to people’s expectation, the Court found the provisions unreasonable and determined the case in the same old way.
This is not a typical employee invention case.
Although the present act may be revised in the near future, it continues to be active for a while. 17

18. Abe, Ikubo & Katayama Kaoru Kuroda kaoru.kuroda@aiklaw.co.jp
Thank you!
Abe, Ikubo & Katayama
Kaoru Kuroda