In certain industries it is common for employment contracts to contain a clause that grants the rights to all inventions by the employee to the employer in exchange for compensation. In some cases, the employers will set the compensation beforehand, essentially providing a set bonus for any and all inventions by employees.
However, this system clearly ignores the fact that some inventions are more profitable than others. Therefore, in some cases, employers may reap a huge windfall by paying a pre-determined bonus for an invention that makes the company large amounts of money. In this scenario, the employee is not granted the fair reward for his or her invention.
To fix this problem, Japanese law allows employees who believe they have not been adequately compensated for their invention to claim the “reasonable value” of the invention from the employer. Therefore, arbitrary pre-determined bonuses for employee inventions are unlikely to be deemed as reasonable. Employers should consider each employee invention separately and ensure that the employee is compensated with the “reasonable value” of the invention.
If you have any questions about licensing intellectual property please contact our office for a legal consultation.