Translation of and Commentary to the Decision of the Tokyo District Court from 16 April, 1999

The Tokyo District Court awarded Plaintiff compensation of 2,289,000 yen for the employee invention which was made by him while he was working for Defendant from which he meanwhile retired. The Court also ruled that 2% of the cost of litigation was to be borne by Defendant and 98 % by Plaintiff. The Court refused to adopt the position of Defendant who argued that its company regulations should also define the method of determining the compensation for the inventions of its employees and that Plaintiff must abide by the company regulations. In contrast thereto the Court stressed the absolute meaning of the legal provisions holding that the employee cannot be required to abandon in advance a claim for reasonable remuneration. Reasonable remuneration cannot be stipulated unilaterally by the employer either. The Tokyo District Court stressed that a written oath executed upon entering into employment with the company which includes a statement to the effect that the employee agrees to abide by company regulations does not mean that the employee must accept the remuneration calculated by the employer. The Court also refused to apply the statute of limitations. This case illustrates that employees’ rights to compensation for their inventions in Japan fall somewhere between those in Germany which also has a specific "Law on Employees’ Inventions" and detailed guidelines for the calculation of remuneration for employees’ inventions, and the U.S.A. in which employees have virtually no right to claim compensation.

In the present case before the Tokyo District Court, S. Tanaka (Plaintiff), a former employee of Olympus Optical Company (Defendant) requested a much higher compensation for an invention he had made during the time of employment with Defendant than Defendant was willing to grant him. Defendant, who had licensed the present patent to a number of companies, referred to its company regulations, which forbade a higher compensation.