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A Green Light For Inventors In Japan


Inventor Shuji Nakamura took on Japan Inc. and won by walking away with the largest payment to an inventor in the country's corporate history. The case, Nakamura v. Nichia, has forced a reworking of the way Japanese companies remunerate the brains behind the thousands of patents registered in Japan each year. Businesses used to pay their scientists peanuts for their valuable inventions. Now, stung by Nakamura's victory, they are learning the meaning of pay for performance.

That's why Nakamura easily earns his Asia Star this year. Twelve years ago he was a top researcher at the research and development labs of Nichia Corp. There he played a seminal role in developing the blue light-emitting diode (LED), which is used in a host of products, including traffic lights and mobile phones, and could one day replace the light bulb. Nakamura's insight helped turn Nichia from a 596-employee company in 1993 to one with 3,315 workers today. The blue LED has also been a huge money-spinner: The Tokyo District Court estimated that it will have made the company $1.1 billion in profits by 2010.

After Nakamura accepted a post at the University of California at Santa Barbara in 1999, Nichia asked him to sign a pact not to do any research into LEDs for three to five years. When he refused, Nichia sued him (unsuccessfully) for breach of copyright. A year later, Nakamura began his own lawsuit against his former employer, charging that Nichia deprived him of a fair share of the profits from blue LEDs.

After three years of bitter litigation, the Tokyo court stunned the establishment by ruling in Nakamura's favor, ordering Nichia to pay him $184 million in early 2004. End of story? Alas, not quite. In January, 2005, a higher court ordered the litigants to settle for a much lower sum of $8.1 million. Today, six months after the verdict, Nakamura, 51, still bristles at mention of the case. "The Japanese court system hasn't changed from the [feudal] period," he says.

Anger aside, Nakamura, a graduate of Tokushima University, can take heart from his influence on Japan's invention business. "Nakamura's case has shed a lot of light on the standing of engineers in Japan," says Masao Iwata, a former researcher at Hitachi Metals Ltd. who, inspired by Nakamura's battle, filed a lawsuit against Hitachi in 2002. Other companies such as Toshiba are now paying top researchers much bigger bonuses. Today Nichia downplays Nakamura's role in developing the blue LED. But no one can deny his impact on the relationship between Japanese researchers and their employers.

By Ian Rowley and Hiroko Tashiro


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