Inventor Remuneration Around the World

Article 35 of the Japanese Patent laws provide for “reasonable remuneration” from the employer when the employer takes assignment of patent rights. In my first reading, the Japanese law does not appear to include a limit to only Japanese employers. In fact, such a limitation could arguably be a violation of the country’s obligation of national treatment. Is there a definitive answer to whether the Japanese law applies to all patents filed in Japan or only those originating in Japan? Do other country inventor remuneration laws apply to US companies filing US initiated inventions in that country?

27 thoughts on “Inventor Remuneration Around the World

  1. 27

    Bang on, Doubtful. Employees seldom take up ownership, precisely because they see no benefit in paying for the upkeep of patent rights that their employer is abandoning. Reflecting, I can see that I might have annoyed you, above. When one is anonymous, the natural politeness mechanism is absent. A feature of this blog, I think.

  2. 26

    If I play “coy gotcha games” it’s to shock, and to gain attention.
    Posted by: MaxDrei | Oct 08, 2008 at 04:25 PM

    Max, this is an annoying way to get attention.

    As far as employer is concerned, giving it back to the employee is fine too, b/c it means employer isn’t paying.

  3. 25

    A number of the larger U.S. corporations I used to do outside counsel patent work for had modest invention incentive programs (typically a relatively small monetary award and a patent plaque). One time I asked an inventor at smallish corporation if they had any inventive program where he worked. After a short reflection he replied, “Well, we get to keep our jobs.”

  4. 24

    Doubtful: they thought of that one too. It’s not rocket science, to figure out what employers might think of. If Employer decides to abandon, there is a statutory duty to offer ownership of the property in the pending app back to the employee inventor. If the PTO or the court finds the subject matter of the app unpatentable, that gets employer out of the duty to pay compensation, pro rata, on the use the employer makes of the invention. If I play “coy gotcha games” it’s to shock, and to gain attention, and not just yours. Thanks for the feed lines.

  5. 23

    Doubtful, would your answer be different after reading Article 10(2) of the German Statute:
    Posted by: MaxDrei | Oct 08, 2008 at 12:10 PM

    Max, don’t play coy gotcha games. If the statute says my first answer is unacceptable, then of course my second answer will change. Are we talking about a hypothetical US statute, as implied in part 1 of your post, or the actual German / Japanese statute?

    Can the employer simply file an application and then never prosecute it? This might be more expensive, but still avoid the need for reasonable compensation. Or file just one claim?

    I’m assuming now that the statute only refers to rights that actually accrue upon the issuance of a patent, as opposed to the normal employment contracts in the US which assign any rights that may exist in any future invention or patent application.

  6. 21

    Doubtful, would your answer be different after reading Article 10(2) of the German Statute: …..the employer cannot plead to the employee that the invention was not eligible for protection……

    Rat: seems/suggest away, as much as you like, if it makes you feel better. But it might be a good idea to check, before you advise your clients.

  7. 20

    This seems to be a standard conflicts question. I suggest that the Japanese patent law would apply when Japanese law generally is the proper law of the assignment and the nationality of the inventor or the location of the corporate head office would not matter.

  8. 19

    But what if the Statute imposes on the employee a duty to disclose to the employer, and on the employer a duty to file, each time a patentable invention is disclosed to it by an employee ? Posted by: MaxDrei | Oct 08, 2008 at 05:24 AM

    Max, your question may not be properly worded. I don’t think this would create a conveyor belt because the question of whether the invention is patentable could be used by the employer to get out of filing.

    Forcing employers to file might be an interesting way to reduce backlog though. Now the employer has an incentive to do good prior art searches: so it files only on the inventions it wants to file, not whatever the employee wants to file on.

  9. 18

    Confused SCOTUS is right, that the prospect of compensation is not the reason for more filings. But what if the Statute imposes on the employee a duty to disclose to the employer, and on the employer a duty to file, each time a patentable invention is disclosed to it by an employee ? Would that be enough, to 1) create a conveyor belt into the PTO, and 2) explain the relatively high numbers of brief patent apps filed in Germany and Japan?

  10. 17

    The “reasonable remuneration” is considered when figuring the salaries, so the end result in Japan or Germany is the same. The difference in the States, is that if an engineer or scientist practices her ingenuity and creativity well, she has greater potential for greater compensation. In Germany or Japan, equal seniority garners you equal pay, and you pretty much just take what the employer feels like giving you come “reasonable remuneration” time, which of course in these wonderful economic times is going to make you wish you got the pay up-front. And as another poster pointed out, the Shuji Nakamura case is considered an anomaly. And I doubt that the “reasonable remuneration” has any measurable affect on the number of applications filed. Social customs and governmental policies play a lot larger role.

  11. 15

    Thank you for the clarification Mami-san. It looks like paragraphs (4) and (5) of the amended Article 35 would restrict a Nakamura-type settlement in future cases. And I seemed to recall that the settlement was reduced to around 8 million USD, even though the article I cited regarding the original story mentions that the original amount was close to 200 million USD.

  12. 14

    The German law only applies to employees having a working contract established under German laws. A similar system of supplementary remuneration also exists in France, and the same provision applies, i.e. the remuneration is due only to those employees having a working wontract established under French laws. In both cases, the supplementary remuneration is due in consideration of the automatic transfer of rights on the invention from the employee to the employer.

  13. 13

    Nicster asks for a definition of “reasonable” as in “reasonable compensation”. That’s one of many reasons to explain the yards of shelf length that the German caselaw occupies. As with many things in this world that lawyers deal with, there is no problem if the issue is squarely addressed at the commencement of employment, BEFORE the invention is made and before it becomes the foundation of the company’s new and successful product line. At that stage, reasonable people (and nearly everybody is reasonable, unless they are in dispute) agree reasonable (and enforceable) terms. The wrong way to do R+D in Germany is to ignore German employee inventor provisions even up to the point that you fire the employee who invented for you (say) the blue diode. Then you are going to become an expert on the unavoidable provisions of German (or Japanese) employee inventor law and the writings in those metres (metres are longer than yards) of shelf length, whether you like it or not.

  14. 12

    Article 35 was amended after the Nakamura decision. The provision you cited seems to be the old one. Please see the current provision

    link to

    Also, the Nakamura case was appealed and settled by extremely lower amount.

  15. 11

    Doubt it e6K, if we had a system like Japan’s, you would already be at your desk so you could begin work promptly at 8:30 and you would begin your preparations for lunch no earlier than 11:59. You would return from lunch no later than 12:50 and be already at your desk so as to resume work promptly at 13:00. You would leave the office no earlier than 19:00 and would routinely be found in the office on Saturday adhering to the same rigorous daily schedule.

    You would not have your own office with a door, but instead would work in an open environment with your colleagues and supervisor within shouting distance. Only there is no shouting, or even talking; only the sound of thousands of keys being stroked every minute.

    I seriously doubt you could handle that.

  16. 9

    No discussion about inventor compensation and Japan would be complete without mention of the case of Shuji Nakamura who invented the Double heterostructure blue LED and proceeded to do something unheard of in Japan and sue his employer, Nichia, winning a huge settlement despite being under an agreement.

    A more complete version of the story can be found here:

    link to

  17. 8

    What about that pesky word “reasonable?” What do companies/courts/employees consider reasonable (I assume the number gets larger as you go to the right)?

  18. 7

    MaxDrei, the Japanese patent law does not include any provision that declares such employment contract as unlawful. The article 35 of the patent law, however, is considered as a “must” provision. Therefore, the inventor can claim reasonable remuneration regardless of the provision of the employment contract. If the employee pays only insufficient money for the invention, the inventor can claim “reasonable remuneration.” It is difficult for the inventor to claim huge money before leaving the company, though.

    For the English translation, “compensation” and “remuneration” are generally used. Although some uses the term “reward,” this is not correct as a legal term. The article 35 of the patent law is interpreted as constituting a part of labor law, and the labor law never forces the employee to confer a “reward.” The reality is, the inventor think it as a reward/bonus, though.

  19. 6

    OMG! Countries that actually know how to spur innovation! Who’d have thunk it would be the tech dominating Germans that are the pioneers?

  20. 5

    Skyline, Does Japanese law include the German (and UK) provision that declares as unlawful any Contract of Employment that purports to avoid the statutory provisions on employee compensation? Moose, is “compensation” as gauche as “remuneration”? Maybe we need to know the word used in the original Japanese and German. UK law uses “compensation”.

  21. 4

    The article 35 applies only to the invention conducted by a person working under an employment contract (under the Japanese labor law) including an obligation to assign to the employee his/her rights with respect to the inventions conducted in the course of his/her duties. No matter the nationality, no matter the origination of the application. The remuneration must be paid to the inventor not only for Japanese patent but also fo the foreign patents (Supreme court decision).

  22. 2

    Dennis, suggest to ask somebody in Germany. Japan took its employee inventor law lock stock and barrel from the German law that goes back to the time in Germany when a certain AH was in charge. Plenty of US companies today employ German scientists and engineers in Germany and, from time to time, these guys disclose patentable matter to their employers. German law applies. It can bite first when the US employer “lets go” an invention- prolific German. That person no longer fears loss of employment, so confers with his lawyer. Soon afterwards the employer receives from that lawyer an enquiry about compensation for inventions made by his client, and patented by the employer. You might be surprised how many yards of shelf space is occupied by the jurisprudence of Germany, under the employee inventor statute. It provides meaningful employment for a very large number of people, in Germany. I would expect Japan to be the same. But it sure pumps up the number of patent applications filed. Which was the original AH big idea.

  23. 1

    I used to work for the American manufacturing arm of a Japanese auto manufacturer. We had many Japanese nationals assigned to our operation. We always paid all inventors (no matter the nationality) under the company-created program to meet the Japanese requirements once the first patent issued, usually the US patent, whether or not a Japanese application was filed. We decided it would be unfair only to pay Japanese nationals because of Japanese law.

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