Case of Japanese Researcher Questions Values of Corporate Japan

John de Boer (University of Tokyo & GLOCOM Platform)

The case of Dr. Shuji Nakamura has stirred a considerable amount of interest in the foreign press over the past week. Mr. Nakamura, a former researcher at Nichia Chemical Industries, sued the company claiming that it had failed to compensate him adequately for his invention of the blue-light-emitting diode, or LED. According to the Associated Press, the patent for LED, which consumes less energy than regular light bulbs, helps make more than 50 billion yen ($407 million) a year in revenue for Nichia. Despite its profitability, however, Nakamura says that he received only 20,000 yen ($160) for each of the dozens of patents on inventions he developed at Nichia and is now seeking $16 million dollars in compensation. With another case involving Mr. Masayoshi Naruse versus Ajinomoto over the rights to Pal Sweet, a low-calorie sweetener aspartame, also in the works, media sources are expecting an avalanche of other court filings to follow challenging what they consider to be the very fabric of corporate Japan.

According to a survey conducted by the Japan Labour Research Foundation and reported in the Singapore Straits Times (SST, September 20), the average payout by corporations to individuals who come up with an invention amounts to a mere 8,980 yen. When the patent is registered and the rights transferred to the company the figure goes up to 22,590 yen. These pathetic compensation rates have given Japanese companies a poor image overseas with reporters calling them "notoriously stingy" and oppressive (SST September 20 and NYT September 18). Fearing a backlash, the SST reported that several brand-name companies have decided to raise their compensation rates for inventors with Mitsubishi Chemical assembling a $2.5 million fund and NEC, Honda Motor and Omron among others also raising their payouts.

Nakamura's suit has turned into something of a David (employee) versus Goliath (corporation) story for the Western media. John Markoff's (NYT) characterization of Shuji Nakamura's case was as follows: "Dr. Nakamura has been celebrated in the United States as an innovative pioneer. But in Japan he is more controversial. After it was clear his inventions would make a lot of money, his bosses took them to market without additional compensation for him. So Dr. Nakamura sued the company, claiming that the patents were a result of his efforts and he should receive royalties" (September 18). Markoff went on to state that, "Dr. Nakamura's suit is challenging many of Japan's basic assumptions about conformity in a culture where personal gain or greed, particularly among technical people, is still considered distasteful".

Others such as Eric Talmadge of the Associated Press wrote that, "many also see Nakamura as something of a champion of the common worker. … While at Nichia he toiled long hours alone in his lab, enduring ridicule, accidental explosions and bureaucratic red tape typical at old-style Japanese companies" (September 19).

Now that the Tokyo District Court has ruled against Nakamura's claim (19 September), this saga and others involving the exploitation of innovative employees in Japan are likely to gain more coverage. Adding to the attention, Dr. Nakamura has just recently received an innovation award for his research from The Economist magazine in San Francisco. Recognition overseas and rejection domestically will likely reinforce the image of corporate Japan as an oppressor.

It is true that working life in Japan is often unrewarding. The laughable compensation rates for employees who come up with inventions in Japan needs to be changed if Japanese corporations desire to retain and attract elite workers. However, the unfortunate thing is that the Western media, and in particular the US press, has framed Nakamura and Naruse's cases in a way that reinforces corporate America as the just, the best and the most rewarding for its employees. In his article John Markoff contrasted Japan with the US stating that, "in the United States, engineers and inventors often share in the corporate rewards from innovation, through employment contracts that specify royalties or other incentives like stock options. But in Japan, engineers and scientists are almost universally treated as "salarymen" who do not participate in corporate profits. Compensation for an invention is at the company's discretion and seldom amounts to more than $300" (September 18).

While on the surface these comments may appear justified they fail to tell the entire story and reflect an ignorance of the merits associated with the Japanese value system. Furthermore, the analysis, or lack there of in some cases, reflects an Orientalist tendency in the West to characterize many non-Western systems as barbaric and backward while simultaneously entering into self-praise.

There are many untold facets of this culture that need to be mentioned in order to provide an accurate understanding of why Nakamura, Naruse and others have failed to receive what they deserve on an individual basis. For example, the Japanese value system caters to the community, which in this case would be the corporation. While the company has the responsibility to nurture and care for all employees, the individual is bound to a social contract that commits the benefits that accrue from his/her work to the community of employees that belong to the company. In theory, all employees should benefit from Nakamura's achievements and not simply those at the upper echelons of the corporate hierarchy and/or the individual. The objective would be to promote the whole over the individual and thereby maintain a sense of satisfaction and security at every level in the company.

Unfortunately, in practice, the effort put forward and the benefits derived by employees are not equal. Consequently, there are some who slack off while others work away and there is also a gender division of rewards where women employees are left out of the equation. Furthermore, corporate corruption has often siphoned away compensation intended for the community. These issues need to be addressed for the system to function properly. However, in a globalized corporate world dictated by US values that praise personal achievement by awarding profit, power and prestige to the individual, many exceptional and disgruntled Japanese are moving to the US, as was the case for Dr. Nakamura.

Although, the US capitalistic, incentive driven system does have its merits, its faults stand in stark contrast to the benefits originally conceptualized under the Japanese structure. Simply put, the US rewards the winners and punishes the losers, it is an elite driven system.

Unfortunately, corporate Japan has come to mirror its US counterpart in many aspects whereby corporate CEO's receive outrageous remuneration while the common employee suffers border-line wages and job insecurity. Even worse are the ills of the global capitalist system driven by Western and Japanese corporations, which profit from slave like labor conditions in the South.

The media's portrayal of Nakamura's case raised a number of questions concerning the merits of the Japanese corporate system and has highlighted an important aspect of working life in Japan that needs to be addressed. Nevertheless, we should refrain from characterizing the US system as a "dream-like" scenario that promotes the hard worker, for that is not the case. The US is excellent in rewarding outstanding individuals, however, it often neglects the importance of the majority.

Articles:

• John Markoff, "A Rebel in Japan Is Hailed as an Innovator in U.S.", The New York Times, 18 September 2002
• Ken Belson, "Japan Court Says Company, Not Inventor, Controls Patent" The New York Times, 20 September 2002
• Hau Boon Lai, " Japanese sues employer over royalties", Singapore Straits Times, 20 September 2002
• Eric Talmadge, "Japan Court Says Company Owns Patent", The Associated Press, 19 September 2002
• Eric Talmadge, "Court rules company, not inventor it employed, owns lucrative patent to blue LED", The Associated Press, 19 September 2002