Calculating Employee/Inventor Compensation in Japan

According to a September 2004 article from NERA Consulting, companies in Japan, including U.S. corporations that operate in Japan, should understand the valuation concepts and the various methods to determine reasonable remuneration for employee inventors. The "profit share" method factors total benefit, return for exclusivity and patent contribution into the calculation, while the "royalty share" method only considers royalty revenue.

The authors explain the complications and complexities resulting from each method of calculation. They conclude that companies should have appropriate rules and methods in place for calculating the value of inventions at the time of the transfer of rights to avoid unnecessary conflict with employees as well as the potential uncertainty that will likely continue to accompany court-dictated awards.