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Semiconductor Company Sued By Former Employee
Economic Advice in Litigation

The Situation

A researcher brought legal action against his former employer, a semiconductor manufacturing corporation. Basing his claim on Article 35.3 of the Japanese Patent Law, the former employee claimed partial ownership to a patent involving the invention of an important semiconductor product. The Tokyo District Court found that the employee contributed at least 50 percent to the patent earnings and was therefore entitled to about 20 billion yen from his employer.

NERA's Role

Retained by the defendant, NERA economists reviewed the valuation model relied upon by the lower court to make its decision and revealed erroneous assumptions in estimating cashflow and risks. NERA constructed a valuation model for the patent in question with more reasonable assumptions and submitted an expert report to the Tokyo High Court describing the analysis and result.

The Result

In 2005, the Tokyo High Court provided a recommendation of settlement in which the former employee was awarded a fraction of amounts admitted in the lower court, an amount close to NERA’s analysis. The case received heavy media coverage, as it not only set a precedent for this type of case, but also involved one of the largest patent-related damage awards sought in Japan to-date.