Compensation System for Invention Achievement

Under the basic policy focusing on R&D, to reward excellent inventions by employees, we have established a compensation system for invention achievement which is more substantial compared to the conventional one. We are establishing an advanced system ahead of other companies, while performing a significant system revision in 1999 with the change of the times, such as abolishing the upper limit of compensation in 2002, etc. The Patents Amendment Act was established in the Diet on May 28, 2004 (enforced on April 1, 2005), the handling of inventions by employees was significantly revised. In response to this, we revised the part of this system with a view to making this system more substantial in 2005.

1. Inventions by Employees

It is defined as follows; "An invention by employees which belongs to the business range of the company, as well as an invention where the act for the invention belongs to the present or past duty of the employees." In other words, most of the inventions within a company apply to the inventions by employees.

2. Compensation System for Invention Achievement

We promptly conducted a significant revision in 1999 to respond to the incentive for encouraging inventions and the Patent Law, as well as a revision like abolishing the upper limit of compensation in 2002.
In our system, in the case that contributions of patent, practical model, and design (hereafter simply referred to as "patents, etc.") were high for the product profit, we recognize the inventor's contribution publicly and give compensation with regard to individual patents, etc.
Taking the opportunity of enforcement of the Patents Amendment Act in 2005, we aimed to improve rationality and understanding while reviewing the calculation criterion of compensation.

3. Criterion of calculating compensation

It is divided into either a case where a profit is made through an implementation by own company, or a case where a license is provided to other company.

Criterion of calculating compensation in the case of implementation by own company

  • Contribution ratio of individual patent rights
    Firstly, if there are multiple patents for the applicable products, allocate a profit to each patent according to the contribution ratio of each patent.
  • Exclusion degree of patent
    Decide the ratio of how much the patent excludes an entry from other companies. From the perspective of responding to laws, though it is necessary to decide this value between 0 to 100%, make it 100% in principle, focusing on the aspects of incentives for encouraging inventions.
  • Contribution degree of technological strength
    Based on the concept that the three elements of "capital strength," "sales strength," and "technological strength" contribute to the product profit with a ratio of one third each (called the Theory of Three Elements), make the contribution degree of technological strength 33%.
  • Contribution degree of patent
    Set the contribution degree of the technology (patent) with acquisition of rights in range from 5 to 10% depending on the situation. For information, know-how, and known technology, etc. apply to the technology with no acquisition of rights.
  • Contribution degree of inventor
    Finally, decide the contribution degree of the inventor. Those that apply to the contribution of company are; investment for the research theme related to its invention, accumulation of technology from the past, and investment for other themes which did not lead to commercialization, etc. With reference to the examples and precedents by other companies, make it 5%.

Compensation is calculated by multiplying the product profit by these contribution degrees, and it becomes approximately 0.1% of the product profit.

Case of license

  • Contribution ratio of individual patent rights
    Concept of allocating to individual patents is same as that of implementation by own company.
  • Exclusion degree of patent
    As it is a license fee, regard it 100%.
  • Contribution degree of technological strength
    As it is deemed that sales strength and capital strength are lower than those of implementation by own company, make it 50%.
  • Contribution degree of patent
    As it is a license fee, regard it 100%.
  • Contribution degree of inventor
    Contribution degree of the inventor is same as that of implementation by own company.

4. Our internal procedures

  • "Consultation"
    Upon the establishment of compensation calculation criterion, consultation with all employees is physically impossible, we explained in the in-house intranet and in-house newsletters to widely gather opinions. Subsequently, we made responses to the gathered opinions in the in-house intranet and in-house newsletters again. Additionally, prior to the above, we held explanatory meetings eleven times in total at each site (Corporate development Division, Business Development Division, and plant, etc.).
  • "Disclosure" and "Hearing of opinions"
    With regard to the compensation calculation criterion, we will continuously disclose it in the in-house intranet and our home page. Also in the case that employees (including retirees) have opinions and questions individually, we will explain separately upon contact with the Intellectual Property Division. In addition, we appoint the director in charge of technology as a chairperson, and assess in the committee for evaluation of invention achievement compensation composed of the members such as the general manager of Human Resources Division and each general manager of the Corporate Development Division.

5. Future system revision

We are committed to encouraging excellent inventions which contribute to business, while continuously making necessary responses in consideration of the Patents Amendment Act which was concluded on July 3, 2015 (enforced on April 1, 2016) and changes in social conditions, etc.