Innovation and New Product Development Case Study

Nakamura vs Nichia: The Debate over Royalty for Corporate Innovations

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Abstract:
Shuji Nakamura (Nakamura), an employee of Nichia Corporation (Nichia) in Japan, invented the world's first blue-LEDs in the mid-1990s. He was paid an annual salary of $100,000. He resigned from Nichia Corporation in 1999 and joined the University of California, Santa Barbara (US) as a professor in the materials department, where he continued to work on LEDs. Prompted by this, Nichia filed a case against Nakamura in 2001 for infringing the patents on the blue LEDs. Nakamura also filed a lawsuit against his former employer demanding a fair share of profits that the company had made by selling his invention. After three years of legal tussle, Nichia paid Nakamura US$8.1 million.

Pedagogical Objectives:

• To discuss the compensation practices of Japanese corporations
• To discuss the effect the Nakamura vs Nichia case had on Japan’s patent laws and recognition practices.

Keywords : Shuji Nakamura,Government and Business Environment Case Study, Nichia Corporation, Employee Invention System in Japan, Japan's corporate culture, Amendments in Japanese Patent Law, US Patent Law, Blue LED's (Light Emitting Diodes), Intellectual property rights, Nakamura's contribution to Nichia, Nichia's profits with blue LEDs, Patent transfer, Japan Inc.

Contents:

• Shuji Nakamura and Nichia Corporation
• Nakamura's 'Victory' over Nichia: Impact on Japan Inc.