Abstract
Abstract: The price of patents is limited by four sides of business management: (1) avoiding costs of the patent in question; (2) founder's profit of inventors, such as researchers and engineers, to bear risks involved in business establishment; (3) factors supporting competitive advantage identified in the resource-based view of strategic management; and (4) negative impact of big money for the researcher's invention. This tetragon of limitations bounds the price range of patents. This is illustrated by exemplifying the LED lawsuit case in Japan. This study presents the four side views on the differences between what companies pursue and what employee inventors pursue. However, these various differences make it possible to coexist and co-prosper between companies and inventors, otherwise they continue the tug-of-war forever on the one-dimensional monetary scale.Keywords: licensing business, LED, founder's profit, resource-based view, work motivationIntroductionIn Japan, Shuji Nakamura, one of the inventors of the Light Emitting Diode (LED), filed a lawsuit against his former employer Nichia Corporation over his inventor compensation in August 2001; the so-called blue LED lawsuit. Consequently, several other lawsuits concerning inventor compensation were filed in Japan, paving the way for research into the evaluation of intellectual property rights, including patents (Goto 8s Nagaoka, 2003; Goto 8s Odagiri, 2003; Kikuchi, 2002; Okada, 2002; Takahashi, 2002).In the LED lawsuit, the Tokyo District Court ruled in the first trial on January 30, 2004 that Nichia's monopoly profit from the invention of the LED was 120.8 billion yen. Setting Nakamura's contribution at 50%, the court calculated his inventor compensation at a whopping 60.4 billion yen and ordered Nichia to pay Nakamura's claim of 20 billion yen in full. Many were surprised by this astronomical sum.However, at the appeal hearing at the Tokyo High Court on January 11, 2005, a settlement was reached; Nichia was to pay Nakamura a sum of approximately 840 million yen, including inventor compensation of around 600 million yen. The LED inventor compensation made headlines, having been settled at just 1% of the 60.4 billion yen estimated by the Tokyo District Court.Originally this court case only covered the method of growing a semiconductor crystalline film of nitrogenous compounds with Japanese No. 2628404 (or Patent 404, taking only the last three digits of the patent number). By contrast, this settlement amount of 600 million yen went beyond 404 and included inventor compensation for all employee inventions attributable to Nakamura alone or to Nakamura and his co-inventors. The settlement covered 191 patents (including 404) and four new designs for practical use registered in Japan, 112 patent applications pending approval by the Japan Office, and corresponding foreign patents and inventions subject to foreign patent application and undisclosed know-how left unfiled for confidentiality. As a result, it is said that the maximum inventor compensation for 404 alone was estimated at 10 million yen. This would mean that the assessment of its value was reduced to a mere 0.016% of the amount appearing in the Tokyo District Court ruling.Four Side Views of PricingMany people were amazed at the astronomical sum of 20 billion yen awarded by the district court. Many interested parties in both the industrial and academic world considered the sum to be far beyond all expectations.1 In fact, business practices had already developed and accepted market quotations for intellectual property rights in the licensing business (Nakano 8s Takahashi, 2012; Saotome, 1987; Saotome 8s Hashimoto, 2003; Wakumoto 8s Nakano, 2005).The monetary value of patents is quite distinct from the scientific value of an invention and depends on a company's strategic decision. …
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