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Japanese Patent Application FAQs
Employee Compensation for Inventions
1. Is there anything that explains about employee compensation for inventions in Japan?
The JPO has issued a document entitled “The Case Studies of the Procedures under the New Employee Invention System.” The following is a brief summary of the document.
1) It is necessary to have regulations in place concerning employee compensation.
2) When the compensation program is prepared, opinions from the inventors should be considered by the employer.
3) The compensation program should include provisions for allowing inventors to have oppotunities to express opposition to the decisions of the employer.
4) If the inventors deem that the compensation amount is not adequate, the inventors may sue the employer. That is, inventors have the right to sue the employer if they are not satisfied with the amount of compensation. However, for an amount of compensation based on a compensation program put in place according to the procedure described above, normally the amount is deemed reasonable. Therefore, we believe that there is little chance that an inventor will be successful in a law suit against the employer for the amount of compensation in the foregoing situation.
5) Recently, there has been a court decision that if there are profits gained for patents filed in foreign countries based on a Japanese counterpart patent, the employer should pay compensation for the foreign patents. The amount of compensation involves the contribution that the inventor made to the invention, including efforts made to obtain licenses in foreign countries.
6) Basically, each invention needs to be handled separately as far as discussion with the inventor about the adequacy of the compensation.
7) Records should be kept of individual negotiations; however we do not have standard forms for this.
Please refer to the following link for details:
http://www.jpo.go.jp/cgi/linke.cgi?url=/shiryou_e/s_sonota_e/case_studies.htm
2. How Japanese patent law states regarding employee compensation for inventions?
Employees' Inventions 35.-(1) An employer, a legal entity or a state or local public entity (hereinafter referred to as the "employer, etc.") shall have a non-exclusive license on the patent right concerned, where an employee, an executive officer of a legal entity or a national or local public official (hereinafter referred to as the "employee, etc.") has obtained a patent for an invention which by reason of its nature falls within the scope of the business of the employer, etc. and an act or acts resulting in the invention were part of the present or past duties of the employee, etc. performed on behalf of the employer, etc. (hereinafter referred to as an "employee's invention") or where a successor in title to the right to obtain a patent for an employee's invention has obtained a patent therefor. (2) In the case of an employee's invention made by an employee, etc. which is not an employee's invention, any contractual provision, service regulation or other stipulation providing in advance that the right to obtain a patent or the patent right shall pass to the employer, etc. or that he shall have a provisional exclusive license or exclusive license on such invention shall be null and void. (3) The employee, etc. shall have the right to a reasonable remuneration when he has enabled the right to obtain a patent or the patent right with respect to an employee's invention to pass to the employer, etc. when he has given the employer, etc. an exclusive license to such invention in accordance with the contract, service regulation or other stipulation or when, in the case where he has given the employer, etc. a provisional exclusive license on such invention with respect to an employee’s invention in accordance with the contract, service regulation or other stipulation, an exclusive license has been deemed to have been established under Article 34bis(34-2)(2). (4) The payment of the remuneration in the preceding paragraph, as provided for in the contract, service regulation or other stipulation shall not be considered to be unreasonable, in view of the situation under which a negotiation is carried out between employer, etc. and employee, etc. in the course of establishing the criteria for determining the remuneration, the situation under which the criteria established are disclosed, and the situation under which the views of employee, etc. are heard for calculating the amount of the remuneration, etc. (5) Where there is no stipulation with respect to remuneration referred to in the proceeding paragraph or where the payment of the remuneration determined thereby shall be considered to be unreasonable, the amount of the remuneration referred to in paragraph (3) shall be determined, taking into consideration the amount of profits that the employer, etc. will make from the invention, the burden assumed and contribution made by the employer, etc. in connection with the invention, and the treatment upon the employee, etc. and other circumstances. |
Article 35 addresses compensation for employees by the employer and that remuneration should be paid to the employee by the employer and the amount of the remuneration must be calculated based on profits from an employee’s invention.
According to Article 35, in view of the inventor, it is necessary to consider all the profits from the invention, including consideration of licenses. Accordingly, it is possible to interpret the law as follows:
When there has been an assignment from your client to the customer of your client, the duty to pay the remuneration, which should be calculated based on sales results, will automatically be transferred to the assignee, even if such an agreement was not made between the inventor and your client.
On the other hand, there is no such a clear legal provision. Therefore, it is possible to interpret the law that the duty to pay the remuneration will not be transferred to the assignee.
There has been no precedent or court decision relating to the situation so far. Therefore, we think that the interpretations both described above are possible.
Hence, we recommend that your client make an agreement with the customer indicating that the duties to pay remuneration to the inventor will be transferred to the customer in the assignment document.