New attitudes: employees and lawsuits involving remuneration for inventions

In this issue's News Clippings, we feature an article describing how Canon was sued by a former employee for part of the value of his own invention. This type of problem surfaced in Japan for the first time last year.

A former employee who had invented blue luminescent diodes has sued his company, alleging that the remuneration he had received from the company for this invention was completely unrelated to what the company had gained from the invention. His lawsuit drew instant notice, since the amount he wanted was seen as incredible by most Japanese people.

Meanwhile, in sharp contrast to this employee, Koichi Tanaka, a Shimadzu Corp. employee who won the Nobel Prize for Chemistry in December 2002 for his analysis of the structure of proteins, announced that he was not expecting any special monetary rewards from his company. Many Japanese privately admire Tanaka's selflessness in not taking advantage of his celebrity to demand money, an attitude which conforms to traditional Japanese "Confucian family-style" business management principles.

Whatever people's reactions are to the contrasting approaches of these two individuals, it appears that times have already moved on. A series of lawsuits has been instigated in recent years by ex-corporate employees against their former companies. The reality is that corporate managers are compelled to deal with them, whether they like it or not.

According to a corporate Internet survey that JIL conducted in August 2002 to investigate how employees' inventions are treated, of the 240 companies that responded, 62.1% reportedly had a system of rewarding inventions, two-thirds of which had actually provided monetary rewards. Moreover, 30% of the companies had raised the amount of reward money over the past 5 years, and about 40% were planning to change and upgrade their existing system. When asked about the specific content of the rewards, 60.3% cited "awards," 58.1% cited "bonuses and lump-sum payments," and 47.1%, "wage hikes."

The Patent Agency recently compiled a draft of a revision of the Patent Law, instructing labor and management to decide on rules for financially rewarding "occupational inventions" that an employee has made as a part of his or her work duties. The aim is to change the pattern of the past, where companies unilaterally decided these rules, and to incorporate more employee opinions, thus avoiding the risk of companies finding themselves at the receiving end of demands for startlingly high monetary rewards. As a result, labor and management would be required to calculate amounts that correspond to a set proportion of corporate sales, a task unimaginable in the paternalistic past. It appears that this and other challenges are heralding another new era in Japanese labor-management relations.