News of the Week

Inventor Knocks Japan's System After Settlement

Science  21 Jan 2005:
Vol. 307, Issue 5708, pp. 337a
DOI: 10.1126/science.307.5708.337a

TOKYO—Shuji Nakamura may be $8 million richer. But his new wealth doesn't seem to have bought much happiness.

Last week the Japanese-born engineer blasted his native country's attitude toward innovation and told colleagues they should join him in the United States if they want to be rewarded for their creative talents. His comments followed a court-mediated, $8 million settlement of a suit against his former employer for a share of the enormous profits generated by his breakthrough development of a blue light-emitting diode (LED) and work on blue semiconductor lasers.

Nakamura, now a professor of materials science at the University of California, Santa Barbara, spent 20 years at Nichia Corp. in Anan, Tokushima. The LEDs are now used in giant outdoor displays and traffic signals and could eventually replace ordinary light bulbs, and blue lasers will be at the heart of next- generation DVD players.

In Japan, patents are awarded to individuals, who may cede rights to their employers in exchange for “fair compensation.” Nakamura claims to have gotten just $190 for relinquishing a key patent covering a new chemical vapor deposition method used in producing both the blue LEDs and blue lasers. The privately owned Nichia dominates the LED market, with total sales in 2004 topping $2 billion and profits estimated at $950 million.

In 2001, Nakamura sued the company for a share of those profits. In January 2004, the Tokyo District Court awarded him $190 million (Science, 6 February 2004, p. 744). Nichia appealed to the Tokyo High Court, which in a statement recommending a settlement said fair compensation “should be sufficient to motivate employees but at the same time allow the company to survive international competition.”

CREDIT: D. NORMILE

Nichia hailed the settlement, which covers all of Nakamura's patent claims. “Our position was well understood by the court, especially the point that the blue LED was not invented by a single individual,” Nichia President Eiji Ogawa wrote in a statement posted on the company's Web site. The business community breathed a huge sigh of relief, with Toyota chair Hiroshi Okuda, head of the Keidanren, Japan's leading business group, calling the amount “appropriate in light of common sense.”

The court's concern for the company's bottom line is uniquely Japanese, says Robert Kneller, a U.S. intellectual-property lawyer on the faculty of the University of Tokyo. “I don't think any U.S. court would have said, ‘According to the law, damages should be X, but that might hurt the competitiveness of the company; therefore we have to make a judgment ourselves.’” But he noted that the issue of fair compensation is so fuzzy in Japan that it creates problems for judges.

Regardless of the amount, the case may already have improved conditions for Japan's legions of engineers. “Engineers, like myself, think it was very good that this suit has prompted discussion about the low status of engineers,” says Hiroyuki Yoshikawa, a former president of the University of Tokyo who is now president of Japan's National Institute of Advanced Industrial Science and Technology. AIST now awards researchers 25% of the royalties from their patents, Yoshikawa says, and many companies have modified their policies to give scientists a bigger bite of the fruits of their research.

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