Recently, some researchers have filed suits against their companies and gained significant remuneration for their inventions, for example, the blue light emitting diode (blue LED) case (Decision by the Tokyo High Court, January 1, 2005; Defendant: NICHIA CORPORATION). As shown below, there are also many lawsuits in the pharmaceutical industry (Decision by the Tokyo High Court, November 21, 2006, Defendant: Otsuka Pharmaceutical Co., Ltd.; Decision by the Tokyo District Court, September 4, 2007, Defendant: Takeda Pharmaceutical Company Limited.; Decision by the IP High Court, May 14, 2008, Defendant: Mitsubishi Chemical Corporation, etc.).
There are issues, especially in the pharmaceutical industry, regarding the employees’ invention system, such as calculation of the degree of the inventors’ contributions and compensation. In the background of this situation, there are several considerations specific to the pharmaceutical industry. Firstly, many years are required from the start of research and development to the launch of new medicines and labor unrelated to the inventors, such as pharmaceutical examinations, arise even after invention. Secondly, the patent right can survive for up to 25 years due to the renewal registration system. In addition, followers’ products have recently begun to enter the market and the product cycle in the pharmaceutical industry is exceedingly long compared with electronic products. In light of these three considerations, the degree of inventors’ contributions in the pharmaceutical industry must be relatively small. It is also difficult to assess inventors’ contribution over the long term since the value of an invention is derived from the research and development stages.
In this article, we introduce a case where a former employee filed a suit against Astellas Pharma Inc. (the Former Yamanouchi Pharmaceutical Co., Ltd.) for remuneration for an employee’s invention related to applied medicine for lower urinary tract disease (LUTD).
Overview of the Case
Plaintiff: A (a former employee of the predecessor of the defendant, Yamanouchi Pharmaceutical Co., Ltd.) Defendant: Astellas Pharma Inc. (Yamanouchi Pharmaceutical Co., Ltd. and Fujisawa Pharmaceutical Co., Ltd. merged on April 1, 2005) Case No.: Tokyo District Court Case No. H21 (wa)-34203 Overview
The plaintiff of this lawsuit is a former employee of the predecessor of the defendant, Yamanouchi Pharmaceutical Co., Ltd. (hereinafter referred to as “Yamanouchi Pharmaceutical” or “the defendant of the first instance”), and one of the joint inventors of other inventions during his career, whose titles are “Sulfamoyl Substitutional Phenethylamine Derivative” and “method of producing Substitutional Phenethylamine Derivative”. He filed a case against the plaintiff of the first instance demanding payment of (1) one billion JPY as reasonable remuneration for succession of rights to obtain a patent concerning such employees’ inventions based on Japanese Patent Law (hereinafter referred to as “Law”), Article 35 prior to the amendment by Law, Number 79 in 2004 and (2) a five year delinquent charge which is mentioned in Civil Code.
The defendant manufactures and sells a treatment (trade name: “Harnal”) of an urination disorder associated with enlarged prostates whose active component is tamsulosin hydrochloride contained in this substance patent. Harnal is one of the defendant’s flagship products which has been sold in over 90 countries since 1993. However, the plaintiff claimed that he received approximately one million JPY as remuneration and filed the case demanding payment of one billion JPY as the shortfall.
Abstract of Judgment
The IP High Court ruled that inventors’ contribution for an invention is 1% and permitted the plaintiff to demand a payment from the defendant of approximately 165 million JPY which deducted this matter’s payments from the remuneration of 168 million JPY based on sales before each expiry of term of Japanese process patent, Spanish process patent, U.S. and European material patent whose terms were not expired on April 1, 2005. The IP High Court rejected the other claims.
Both of the plaintiff and the defendant appealed the ruling.
Plaintiff and the Appealed (hereinafter referred to as “the plaintiff of the first trial”) The Appealed and Plaintiff (hereinafter referred to as “the defendant of the first trial”) Case No.: The IP High Court Case No. H24 (ne)-10052 Overview: the appeal court of the original decision above Abstract of Judgment
The IP High Court ruled that the amount of unpaid reasonable remuneration for the plaintiff of the first trial was 44,781,600 JPY which deducted this matter’s payments from 47,880,000 JPY, the total of reasonable remuneration for the European substance patent and the U.S. substance patent since April 1, 2003.
Point of Issue
In this article, we bring up “contribution of companies and inventors” as a main point among several points.
Contribution of Companies (employers) and Inventors (employees)
In this judgment, the contribution of companies and inventors was described as below.
The creativity for the original idea by the plaintiff for the first trial before the stage of synthesis of tamsulosin hydrochloride which is the active component of Harnal should be sufficiently appreciated and, regarding the synthesis of tamsulosin hydrochloride, joint inventors including the plaintiff for the first trial should also be sufficiently appreciated. However, the contribution by the plaintiff of the first trial through the process after the synthesis was limited. On the other hand, the contribution by the defendant for the first trial before the stage of synthesis of tamsulosin hydrochloride cannot be called small and they also contributed significantly to synthesis of tamsulosin hydrochloride. In addition, it should be said that the defendant of the first trial made a particularly significant contribution to sales of Harnal.
In other words, although the IP High Court recognized a certain contribution of joint inventors to this material invention, the contribution was extremely limited compared to the contribution of the company. The IP High Court ruled that inventors’ contribution was 1% and company’s contribution was 99% in line with the original decision. The IP High Court also recognized that the company makes a significant contribution to selection of indications of tamsulosin hydrochloride after synthesis and development of associated technologies for commercialization of the product.
*Although the IP High Court ruled that the plaintiff’s contribution was 1% in line with the original decision, they ordered the defendant to pay 44 million JPY discounted from 120 million JPY which was ruled at the first trial. The reason for this judgment being that the IP High Court ruled that a part of the right to demand remuneration had lapsed over time.
In this judgment, it was decided that since employers in the pharmaceutical industry bear not only a great deal of expense for development of new medicine, but also various risks associated with commercialization of a product, it is appropriate that the employers’ contribution is sufficiently appreciated during calculation of remuneration.
In addition, there is another argument that “employees’ inventions should be attributed to companies”. The Japanese Patent Office (JPO) has created an “Investigation Research Committee regarding the Employees’ Invention System” at the intellectual property research laboratory and has been carrying out a discussion with the idea to amend Japanese Patent Law, Article 35.
With regard to attribution of employees’ inventions, the Experts Committee on the patent system at the JPO has been advancing a discussion oriented toward transition of employees’ inventions to companies. For your reference, we introduce a related article of Sankei Shimbun issued on June 18, 2014, below.
The Japanese Patent Office (JPO)’s Experts Committee on the Patent Law discussed controversial issues on “employees’ invention” on June 18, 2014. The committee agrees that ownership of a right to obtain a patent for an employee’s invention will be transferring from the employee to the company to which the employee belongs under some regulation. The committee also confirms how to proceed with the revision of the current legislation: the committee will further discuss the special regulation to secure remuneration for employees’ inventions for the employee, etc. in detail, will conclude the issues in this summer if it goes smoothly, and will set out to submit the draft revision to the Japanese Patent Law to the Regular Diet next year.
Under the current Japanese Patent Law, a right to obtain a patent for an invention does not initially belong to a company, but initially belongs to an inventor who works at the company. If the ownership of the patent right is transferring to the company, the inventor of the invention is eligible to request from the company payment of value. The committee expects to reconsider the employees’ invention system adding a special condition on securing appropriate remuneration for the inventor, and to reconsider the system to set up the special provision that the patent right belongs to the company.
Industry has been requesting that the Japanese government revises the employees’ invention system behind a glowing number of disputes between an employee and a company around the high amount of payment of value. Industry emphasizes that a right to obtain a patent for an invention should initially belong to a company. According to the preliminary draft for a “new” growth strategy announced by the Japanese government on June 16, the new policy indicates that revision to the “employees’ invention system” and the relevant legislation is set to be submitted to the Diet at an early stage.