Employee Inventions in Japan: Who Owns the Patent Rights and What Are the 'Reasonable Remuneration' Rules? In Japan, where a significant majority of patent applications—reportedly around 97% in 2013—are filed by corporations, the legal framework governing inventions made by employees is of paramount importance. This system, known as "Shokumu Hatsumei" (employee inventions or service inventions), has unique characteristics regarding the ownership of
What Exactly Does Japanese Patent Law Consider an 'Invention,' and How Does This Impact Software and Business Methods? Understanding the precise definition of an "invention" under Japanese patent law is crucial for businesses operating in or seeking protection in Japan, particularly as technology evolves in areas like software and business methods. The Japanese Patent Act provides a foundational definition, but its application, especially concerning the "
Sham or Substance? 1967 Japanese Supreme Court on Collusive Share Payments and Employee Subscriptions Date of Judgment: December 14, 1967 Court: Supreme Court of Japan, First Petty Bench Introduction Ensuring that a company genuinely receives the capital for which its shares are issued is a cornerstone of corporate integrity and creditor protection. Japanese company law has long criminalized practices designed to create a false
Golf Club Memberships & Corporate Spin-offs: Japanese Supreme Court on Successor Company Liability for Deposits Date of Judgment: June 10, 2008 Court: Supreme Court of Japan, Third Petty Bench Introduction Deposit-based golf club memberships have long been a feature of the leisure industry in Japan. Members typically pay a substantial upfront deposit to the club operator in exchange for the right to use the golf
Clearing the Deck: Japanese Supreme Court Affirms Set-Off Rights Against Corporate Bonds Date of Judgment: February 21, 2003 Court: Supreme Court of Japan, Second Petty Bench Introduction The legal mechanism of "set-off" (相殺 - sōsai) allows two parties who owe debts to each other to cancel out their mutual obligations up to the amount of the smaller debt. It'
Standing Up for Samurai Bondholders: How Japan's Supreme Court Empowered Bond Administrators Date of Judgment: June 2, 2016 Court: Supreme Court of Japan, First Petty Bench Introduction "Samurai bonds"—yen-denominated bonds issued in Japan by foreign governments or corporations—are a significant feature of the Japanese financial market. When these bonds are issued, a financial institution, typically a bank, is
Corporate Bonds vs. Predatory Loans: Japanese Supreme Court Clarifies Interest Rate Cap Exemption Date of Judgment: January 26, 2021 Court: Supreme Court of Japan, Third Petty Bench Introduction Japan's Interest Rate Restriction Act (利息制限法 - Risoku Seigen Hō) plays a crucial role in consumer and borrower protection by imposing statutory caps on interest rates for monetary loans. Its primary aim is
Whose Side Is the Company On? Japan's Supreme Court on Company Intervention in Derivative Suits Date of Judgment: January 30, 2001 Court: Supreme Court of Japan, First Petty Bench Introduction Shareholder derivative suits are a cornerstone of corporate accountability, allowing shareholders to sue company directors (or other liable parties) on behalf of the company for harm caused to it by the directors' misconduct. The
Getting the Address Wrong: Japanese Supreme Court on 'Substantial Compliance' in Derivative Suit Demands Date of Judgment: March 31, 2009 Court: Supreme Court of Japan, Third Petty Bench Introduction Derivative lawsuits are a powerful mechanism enabling shareholders (or members of a cooperative) to hold company directors or cooperative officers accountable for misconduct by suing on behalf of the organization itself. However, before initiating such
Can a Company Unilaterally Cut a Director's Pay? A 1992 Japanese Supreme Court Ruling Date of Judgment: December 18, 1992 Court: Supreme Court of Japan, Second Petty Bench Introduction The remuneration of company directors is a critical aspect of corporate governance, typically determined by the company's articles of incorporation or by resolutions of its shareholders' meeting. Once this remuneration is set,
Payback Time? Japanese Supreme Court on Good Faith Limits to Reclaiming Unauthorized Director Severance Date of Judgment: December 18, 2009 Court: Supreme Court of Japan, Second Petty Bench Introduction The payment of remuneration, including retirement allowances (severance pay), to company directors in Japan is strictly governed by corporate law. The fundamental principle is that such payments require proper authorization, typically through the company'
No Blank Checks: Japanese Supreme Court on Director Pay Authorization Date of Judgment: February 21, 2003 Court: Supreme Court of Japan, Second Petty Bench Introduction Determining the remuneration of company directors is a critical aspect of corporate governance. It directly impacts company expenses and involves individuals who are in positions of power and trust. A key question arises: can directors
Interested Directors & Board Votes: 2016 Japanese Supreme Court on When Resolutions Remain Valid Date of Judgment: January 22, 2016 Court: Supreme Court of Japan, Second Petty Bench Introduction Conflicts of interest are a persistent challenge in corporate and cooperative governance. Directors have a duty to act in the best interests of their organization, but what happens when a director has a personal stake
Directors in the Dust? Japanese Supreme Court on Director Status After Company Bankruptcy Date of Judgment: April 17, 2009 Court: Supreme Court of Japan, Second Petty Bench Introduction When a company is declared bankrupt, the immediate focus shifts to the administration of its assets by a bankruptcy trustee. But what becomes of the company's directors? Do their powers and positions automatically
Challenging Officer Elections: Japanese Supreme Court on Preserving Legal Standing When Terms Expire Date of Judgment: September 3, 2020 Court: Supreme Court of Japan, First Petty Bench Introduction Shareholder and cooperative member democracy hinges on the fair and lawful election of officers (directors and auditors). But what happens when a member challenges the validity of an officer election, and during the course of
Flexibility vs. Limits: 1962 Japanese Supreme Court on Conditional Increases to Authorized Shares Date of Judgment: March 8, 1962 Court: Supreme Court of Japan, First Petty Bench Introduction A company's capital structure is a cornerstone of its financial health and growth potential. Two key concepts in this structure are "authorized shares" – the maximum number of shares a company is
Front Row Ruckus: Japanese Supreme Court on Preferential Seating at AGMs and Shareholder Equality Date of Judgment: November 12, 1996 Court: Supreme Court of Japan, Third Petty Bench Introduction Shareholder Annual General Meetings (AGMs) can sometimes be contentious forums, especially for companies dealing with controversial issues. Company management often seeks to ensure smooth proceedings, but what happens when measures taken to control the environment
Cumulative Voting and Shareholder Notices: A 1998 Japanese Supreme Court Decision on Implied Director Numbers Date of Judgment: November 26, 1998 Court: Supreme Court of Japan, First Petty Bench Introduction In corporate governance, the election of directors is a fundamental shareholder right. For minority shareholders, a mechanism known as "cumulative voting" can be a vital tool to ensure representation on the board. This
Sham Lawsuits and Shareholder Rights: Japan's Supreme Court on Retrials of New Share Nullifications Date of Judgment: November 21, 2013 Court: Supreme Court of Japan, First Petty Bench Introduction The issuance of new shares by a company is a fundamental corporate action. However, the validity of such an issuance can sometimes be challenged by existing shareholders. Imagine a scenario where new shares are issued
Registered vs. Real Owner: 1960 Japanese Supreme Court Ruling on New Share Allotments Date of Judgment: September 15, 1960 Court: Supreme Court of Japan, First Petty Bench Introduction The transfer of shares in a company involves not only the agreement between buyer and seller and the delivery of share certificates (if issued) but also, crucially, the registration of this transfer in the company&
Old Share Certificates, New Rules: Japanese Supreme Court on Shareholder Rights After Missed Deadlines Date of Judgment: March 7, 1985 Court: Supreme Court of Japan, First Petty Bench Introduction For Japanese companies that issue physical share certificates, significant corporate changes—such as amending the articles of incorporation to introduce restrictions on share transfers, or undergoing share consolidations or mergers—often necessitate a formal process
Share Transfers Before Certificates: A Landmark Japanese Supreme Court Ruling on Good Faith and Undue Delay Date of Judgment: November 8, 1972 Court: Supreme Court of Japan, Grand Bench Introduction In traditional corporate law, share certificates have long served as tangible proof of stock ownership and a key instrument for effecting transfers. Japanese corporate law historically placed significant emphasis on these certificates. However, this system could
Navigating Inheritance and Debt: Japanese Supreme Court Clarifies Enforcement Against Jointly Inherited Book-Entry Securities Date of Judgment: January 23, 2019 Court: Supreme Court of Japan, Second Petty Bench Introduction In an increasingly digital financial world, the nature of asset ownership and transfer has evolved significantly. Japan, like many other nations, utilizes a book-entry system for the transfer and holding of shares and other securities.
Promoters' Pre-Incorporation Deals: Who is Liable? A 1960 Japanese Supreme Court Ruling on "Promoters' Associations" Judgment Date: December 9, 1960 Before a company is formally incorporated, its founders, known as promoters (発起人 - hokkinin), often engage in various activities to lay the groundwork for the new enterprise. These activities can range from purely preparatory acts, like drafting the articles of incorporation, to conducting actual business
Paying for 'Smooth' Shareholder Meetings: A 1969 Japanese Supreme Court Case on Sōkaiya Bribery Judgment Date: October 16, 1969 For many years, Japanese corporate annual general meetings (AGMs) were often plagued by the presence of sōkaiya – individuals or groups who specialized in disrupting or, conversely, ensuring the smooth passage of shareholder meetings, typically for a fee. A landmark 1969 Supreme Court of Japan decision,
