A landmark case: Japan's Supreme Court upholds the right of inventors to be properly rewarded for their inventions


Former employees are increasingly suing their companies over ownership of their inventions and seeking compensation for what their former employers have earned from their creations.

The Japanese Supreme Court ruled on April 22, 2003, in favor of Shunpei Tanaka, a former employee of Olympus Optical Co., who invented optical videodisc pickup apparatus for compact disc players in 1977.  The Court decided that the former engineer should receive a share of the profits that Olympus earned from the patent.

Tanaka initially sued Olympus for 1 billion yen ($7.7 million) in 1995 after he left the company -- where he worked for more than 20 years -- saying he was only paid 210,000 yen ($1,740) and was not fairly compensated for his invention patented in 1978.  His invention is now commonly used in CD and DVD players to read discs.

In its verdict, the Supreme Court sided with Tanaka, ruling that Olympus owed him 5 percent of the value of the patent, which was estimated at 50 million yen ($415,000).  The ruling, which upheld a lower court decision, also granted inventors who believe that they have not been sufficiently compensated the right to appeal for a larger portion of the profit, regardless of internal company rules regulating remuneration for inventions.  The company is now ordered to pay the inventor about 2.3 million yen ($18,988) on top of the awarded amount that was initially paid to him for the invention.

This has become a landmark ruling in terms of how the top court interpreted the Japanese Patent Law, Article 35, Paragraph 4.  However, the Court did not explain its reasons behind granting Tanaka 5 percent of the value of the patent.