Vol.40-No.11 November 1, 2001
Amidst the slump in the information technology (IT) sector, many electronic device and computer companies have announced plans to reduce their workforce.
Toshiba Corp. plans to spin off its semiconductor and memory-chip business, which will merge with another company and in the process shed some 17,000 Japanese workers. Approximately 10,000 of these jobs will be lost due to natural attrition. The company is planning to rely on an early retirement scheme operating over a limited period to reduce the remaining 7,000 positions. Toshiba is the biggest supplier of semiconductors in Japan, but this time its main factories are subject to restructuring. The plan will affect some 30 percent of its production base, or six factories, in the form of mergers or shutting down production lines.
Voluntary retirement is also expected to become a reality at Matsushita Electric Industrial Co. Ltd., which has been a model of Japanese-style business management by steadfastly maintaining lifetime employment of skilled workers. Voluntary retirement will be recommended for some 80,000 workers aged 58 and younger with tenure of 10 years or longer. The company has not set a limit on the maximum number of retirees, and is prepared to pay the retirement allowances laid down in company regulations, together with an extra payment of, at a maximum, 2.5 times the annual salary. The labor reduction plan will be carried out over an extended period, with no definite deadline set for applications for voluntary retirement. Matsushita aims to carry out a fundamental restructuring of both its home electronic goods and computer-related businesses.
Many of the restructuring plans recently announced by major electronic machinery companies are characterized by the closure and sale of overseas factories. Hitachi Ltd. will slash 4,500 jobs abroad within this fiscal year by selling factories in Malaysia and Singapore that produce display tubes for personal computers. It will also cease production of electrical equipment systems for automobiles in the U.K., entrusting the production to U.S. manufacturers instead. Fujitsu Ltd. is expecting to target 11,400 overseas jobs in its projected 16,400 job cuts. In a similar fashion, NEC will slash 4,000 jobs, 1,500 of them abroad; and Aiwa a total of 5,000 jobs, 3,600 of them abroad. Such moves seem to indicate a change in policy by Japanese firms concerning the role of their overseas operations.
In general, Japanese firms reward those employees who have invented something which will bring enormous benefits to the company. These rewards include a certain amount of remuneration, favored treatment in personnel management, and improved conditions for research. But are such rewards enough if the inventions draw worldwide attention?
Professor Nakamura of the University of California has filed suit in the Tokyo District Court for the payment of about ¥2 billion against a company he worked for until the end of 1999, claiming that he had not received fair remuneration for technologies he had developed and for which the company obtained patent rights. The case is drawing attention among firms that employ many technologists engaged in research and development, and see these inventions as sources of profit.
During his stay with the company, Professor Nakamura succeeded in developing the world's first blue light-emitting diode (LED), something that was not expected to be achieved within the 20th century. The company obtained some 100 patents covering developments throughout the production of the blue LED, ranging from the production of materials to the designing of production equipment. However, at the time Prof. Nakamura received a mere ¥20 thousand for the achievement. Upon his departure, the company reportedly demanded an agreement, with an offer of ¥50 million in retirement allowances, to keep his development secret, which would have made it quite impossible for him to continue his research activities. He rejected the demand, and the two parties ended up filing suits against each other. (Initially the company sued him, the basis of which remains undisclosed.)
Prof. Nakamura's claim is based on the inadequacy of a reward of a mere ¥20 thousand. But it is extremely difficult to calculate logically a “fair” figure. Although final profits are in fact rooted in a development by an employee, such profits are due to various other factors and their interaction, such as company investment and the research environment, including the necessary research apparatus, which supported the technologist in his work, together with the contributions of other employees while the development was being put on a production basis and marketed. The calculation of a fair remuneration is difficult to make from the legal point of view also: Paragraph 3 “Employees' Inventions” of the Patent Law Article 35 regulates that in cases where an employee working as an inventor has developed something which leads to patents obtained by his employer, the employee possesses the right to appropriate remuneration. However, Paragraph 4 of the law merely stipulates that the amount of the remuneration has to be determined with consideration of the level of the employer's contribution, and does not help in determining what is “appropriate.”
Since the 1980s, cases concerning the calculation of “appropriate remuneration” have been brought to court, but the rate for calculating the final amount of such remuneration varies substantially depending on the case. Moreover, a verdict issued by the Tokyo High Court in May this year indicated that companies could not make unilateral decisions on the amount of “appropriate remuneration,” and that if the amount which a companyclaims to be appropriate does not agree with the figure defined in Paragraphs 3 and 4 of the Patent Law Article 35, then the employee may claim an “appropriate remuneration” without being restricted by the amount calculated by the employer. The case in question has been appealed to the Supreme Court, and a final judgement has not yet given. However, where the claim for ¥2 billion in compensation involving the blue LED is concerned, the trend seen in a series of recent judicial decisions seems rather to favor the employee, and the company is likely to be ordered to pay an “appropriate remuneration” to Prof. Nakamura.
Undoubtedly, appropriate rewards for researchers who have put many years of effort into inventions will contribute to the company's profits, as well as to the development of science and technology. But on the other hand, such treatment of particular employees may lead to unfair treatment of others engaged in research and development. This could lower the work incentives of employees as a whole, creating a difficult problem for companies. In a meantime, attention is focused on the judgement of the court over the development of the blue LED, which, it is also said, could possibly bring Prof. Nakamura a Nobel Prize.
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