How much is an Innovative Engineer Worth?

Back to Contents of Issue: November 2002

AROUND THE J@PAN INC office, Shuji Nakamura is something of a folk hero. The former Nichia Chemical Industries engineer created the blue light-emitting diode (LED) in 1993. Nichia quickly dominated the market for blue LEDs and has made something north of JPY80 billion on the innovation so far. Nakamura's compensation? Twenty thousand yen. That didn't sit well with the engineer, and he decided to take his case to the media and, eventually, the courts. (We furthered his cause with a cover story in July 2001, and since then, he's appeared in all sorts of media, including a Uniqlo commercial in which he was bathed in blue light as he posed in the maker's clothes.)

In September, Nakamura lost an initial ruling in the Tokyo District Court on his claim that he never gave away his patent rights. He was suing Nichia for JPY2 billion in compensation. The Japanese media reported that the court is now deliberating on whether he deserves more compensation than the JPY20,000 Nichia paid him. At the same time Nakamura will be appealing the patent ownership decision.

This comes as an Ajinomoto employee is suing his company for JPY2 billion in compensation for his role in developing an artificial sweetener that has proven very lucrative for the company. Suddenly patent rights and employee compensation issues are coming to the fore. You would think that engineers would be rooting for Nakamura to take Nichia to the cleaners, but you'd be wrong -- at least partially so. A year ago, I brought up Nakamura's case with a class of about 20 first-year engineering students at the University of Tokyo, and I quoted the former Nichia engineer as saying, "The best engineers should be paid like Ichiro." I expected a strong majority to be on Nakamura's side; after all, these were the very people who would some day reap the benefits of improved compensation for lucrative patents. But the class was about equally split, and the side that disagreed with Nakamura was far more vociferous. They argued that compensating engineers too much for innovations would destroy teamwork. They also disliked what they saw as Nakamura's abrasive attitude.

These were bright kids with promising futures -- perhaps when they start paying the bills, they'll change their tune, but I think their resistance to Nakamura's approach is more widespread than the mass media is letting on. If Nakamura eventually wins his case against Nichia, it will be hailed as a watershed ruling in employee compensation. But a favorable ruling really would be a simple indictment of Nichia's sloppy and short-sighted handling of the case, nothing more.

The idea that the sky is the limit for employee compensation is still an alien one in Japan. And the next generation of Nakamuras may have to follow Shuji overseas (he now works in Santa Barbara) to find the riches they crave.
-- Bruce Rutledge (From the J@pan Inc newsletter, a free email newsletter published every Wednesday. Subscribe to our free email newsletters at

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