News of the WeekIntellectual Property

Court Tells Nichia to Pay Blue LED Inventor $180 Million

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Science  06 Feb 2004:
Vol. 303, Issue 5659, pp. 744
DOI: 10.1126/science.303.5659.744a

TOKYO—Japanese courts last week delivered stunning monetary awards to two corporate researchers who claimed that they had received inadequate compensation for inventions produced for their employers. The plaintiffs hailed the victories as progress on the road to better treatment for corporate scientists. But others warned that the awards could spell the road to ruin for companies by undermining the potential payoff of a breakthrough discovery.

In the most eye-popping decision, handed down on 30 January, the Tokyo District Court awarded $180 million to materials scientist Shuji Nakamura for his development of a blue light-emitting diode (LED) while employed by Nichia Corp. of Anan, Tokushima Prefecture. That's a million times more than the $180 that the company originally paid Nakamura, now a professor at the University of California, Santa Barbara, for the rights to a key LED patent. In a separate case decided 1 day earlier, the Tokyo High Court ordered Hitachi Ltd. of Tokyo to pay $1.5 million to former company researcher Seiji Yonezawa for three key technologies that are at the heart of CD players and other optical disk devices.

Money talks.

Shuji Nakamura (left) and his lawyer speak to the media after a court awarded him $180 million.


Katsuya Tamai, a professor of intellectual property law at the University of Tokyo, says the decisions reflect the ambiguity in existing patent laws. Currently, patents are given to individuals, who may cede rights to their employers in exchange for “reasonable” compensation. The two recent cases hinged on the definition of that term, which is not spelled out in the law. Although a growing number of researchers have won suits that allege they have been treated unfairly by their companies, until now the awards have been small.

What may have tipped the scales in the Nakamura case is the fact that LEDs are a multibillion-dollar industry. Blue LEDs can be combined with previously developed red and green LEDs in giant outdoor displays and to produce white light devices that could supplant conventional light bulbs. The court determined that Nichia had earned more than $1.1 billion in profits from the technology since it was commercialized in 1993. In the Hitachi case, the appellate court took the unusual step of quadrupling the award of a lower court, which had ruled that Yonezawa was entitled to a slice of the company's domestic licensing but not its foreign activities.

Nichia, in a statement posted on its Web page, criticized the court decision for an “excessive” interpretation of the provisions of the patent law. It has already appealed the ruling. (Hitachi is also planning to appeal to the country's highest court.) In the meantime, Japan's leading daily economics newspaper, Nihon Keizai Shimbun, called the rulings “out of touch with the realities [of business] in Japan.” It warned that a rash of such verdicts could “strip profits from many technology-oriented companies.” Tamai says he worries that more large awards could pressure corporations to move their laboratories offshore. What's needed, he says, is reform of the patent law.

Not surprisingly, Nakamura offers a more positive take. Larger awards, he told a press conference, will create financial incentives for scientists “that will have everyone striving to make discoveries. … I think this will fuel the dreams of young people interested in science.”

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