1.  Reconsideration of the Employee Inventions System in Japan Pre-Meeting AIPLA Mid-Winter Institute January 27, 2015 Orlando Sumiko Kobayashi 1

2. Reconsideration of the employee inventions system in Opinion on reconsideration of the intellectual property system for the purpose of promotion of innovation in our country and the international harmonization in the system issued by the government on December 2014 2

3. Recommendation First: Statutory obligation of the employer (1) To give the employee(s) economic benefit (money and/or other) (2) Adjustment in Incentive Policy Second: The employer owns the right to obtain a patent Third: Government will prepare Guideline for Incentive Policy 3

4. First: Statutory obligation of the employer  Give the employee(s) economic benefit (money and/or other)  To compensate for achievement (or fruit) of the employee’s invention (“Invention”)  As the incentive for the Invention  Based on the provisions in the contract or the employment regulation (collectively “Regulation”) 4

5. Incentive policy  The employer shall follow the guideline made by the government; and  make adjustment in the incentive policy with the employees. 5

6. Second: The employer owns the right to obtain a patent  The current system shall be revamped to the following: The right belongs to the employer from the beginning. 6

7. Expected Advantages - Conformity to the actual situation - Sense of unity between the employer and employees - Less difficulties in the intellectual property management - Free from problems such as “duplicated assignment”, “instability of the ownership” 7

8. Provided that  no disbenefit is caused by the amended law.  For that purpose, the following should be allowed: Some organizations may prefer the current the system, To attract excellent researchers who are liable to work independently 8

9. Consideration shall be taken not to cause the following problems: In companies having no Regulation on Invention The right of the inventors in the companies may be unfairly treated, thereby troubles between the employer and employees might occur 9

10. Primary Requirement Preparation of Regulation is the primary requirement However, it is true that middle or small entities are present, which have difficulties in preparation of Regulation. Consideration of the latter above, thereby Stable ownership of the patent for Invention is secured 10

11. The government should prepare the guideline For preparation of the incentive policy (i) Less costs and difficulties in the employer in its preparation of the policy (ii) Elevate legal predictability Guideline of the processes of adjustment Preparation is made in consideration of supporting private sector’s initiative to enhance its creativity 11

12. The government should prepare the guideline taking the following into account  diverse situations in the research and development in the individual industries,  changes in the social and economic situation. Intended advantages: (i) smoothen the adjustment in the incentive policy (ii) elevate persuasion of the incentive among the employees, and (iii) reduce the risk of litigations 12

13. Government’s Message - It is irrational to dispute as to who owns Invention. (i) The ownership is divided into the right to obtain a patent, and (ii) Inventor’s personal right - Sharing the purpose, collaboration -> excellent Invention - Achievement of Invention is benefit common to employer and employees 13

14. My Point on Incentive To secure incentive to both: ordinary inventive work great invention (such as blue LED)* To show the criteria for the second probable enough for everybody to have motivation To secure trustful policy in treatment: position, research environment, the next R&D subject Each company having its own history should have or prepare own policy. 14

15. Current System  Purpose of its introduction To solve the problem of frequent bringing action to the court disputing “reasonable compensation” for Invention in the old system The amendment to the old system was enacted in 2004. 15

16. The current system  Premise: the right to obtain a patent for Invention belongs to the employee(s) Features:  The employer can be assigned with the right to obtain a patent for Invention according to the Regulation established prior [to the Invention].  The employee(s) has a right to receive “reasonable compensation” for patents, etc. for the Invention in the case where the employer was assigned with the patents, etc. according to the Regulation. So called “statutory right to claim compensation”. 16

17. The current system The compensation determined according to the Regulation is deemed “reasonable” unless it is found unreasonable upon taking the following into account:  The contents of the discussion or negotiation, the contents of the guideline disclosed, and the opinions taken from the employee(s). The “reasonable compensation” is determined taking the following into consideration:  amount of benefit which the employer is entitled to receive, burden that the employer needed to bear, contributions by the parties and treatment of the employee(s), and others. in case where the Regulation is absent or the payment for the compensation according to the Regulation is found “unreasonable”. 17

18. The current system Problem Situation where the Invention is made by teamwork causes Complexity and difficulties in calculation of the compensation and management of the patents including ownership issue 18

19. ANY QUESTIONS ? Thank you ! 19