## Thursday, November 06, 2014

### Ex-employer won't meet blue LED Nobel prize winner

The Japan Realtime blog at the Wall Street Journal informs us about some bitterness surrounding Dr Shuji Nakamura of UC Santa Barbara who won the physics Nobel prize one month ago.

You should understand that I am among those who consider the invention of blue LEDs to be primarily an achievement of engineering, not physics, and if I had to give a Nobel prize for that, I would probably pick the Nobel prize for chemistry. I realize that there are no "chemical reactions" involved in the operation of blue LEDs. But the kind of "combination of the right elements" to obtain the right "atomic and molecular properties" is fully analogous to what the chemists are doing.

But this "applied" character is something we're used to from many previous science Nobel prizes. After all, Alfred Nobel might have very well considered his dynamite to be a discovery in physics, too, so I am not going to pretend that I am surprised. This kind of inventions is what he would probably want to be rewarded. I would certainly not describe the choice as something that "discredits" the award (in the same sense in which way too many recent Nobel Peace Prize helped to discredit the already pretty unimpressive honor: no, while different Nobel prizes may have been created equal, they are no longer equal today). The invention may be described as a great result of applied physics, too.

If you think that everyone is universally beloved by his former employers etc. after he wins a Nobel prize in physics, you would be wrong.

The discovery took place in 1994, i.e. twenty years ago, and as the WSJ blog reminds us, the invention occurred in the Nichia Corporation. It is a Japanese producer of LEDs whose annual revenue reaches something like $2 billion dollars. Nakamura left Nichia 15 years ago, about 5 years after his invention. For years, Nakamura and Nichia would be battling in the courts because he wanted to be compensated for the invention. I find this very fact bizarre. I would assume that a research department of a company that has the potential to produce multi-million- or multi-billion-dollar inventions has some very rigorous contracts that exactly specify who gets how much money or royalties when an important invention is made. But apparently, it wasn't so. (Bosses supervising similar promising research centers should surely hire some lawyers and improve the precision of their contracts!) It is totally conceivable that the contract would say that the researcher gets nothing beyond his basic income. Such an arrangement would probably fail to encourage the researchers to invent great things. A better contract could give him much more than that. (As far as I can say, the Nobel prize rules overrule everything else and the prize should go to the real inventor/discoverer if she or more likely he can be identified. So any paragraph in an employee treaty saying that the employer gets the Nobel prize would probably be invalid.) At any rate, when Nakamura originally discovered the blue LEDs, he got a bonus of$176 from the company. That's really cute. He could have bought a few LEDs for himself, or perhaps hire someone to clean his restroom. After years of battles, Nakamura and Nichia settled – he was paid about \$7.4 million in 2005 and the wars ended.

Was it too much? Too little? I don't know. It looks like a substantial amount of money (although I would have to know how much the company has actually earned from the blue LEDs for my opinion to be more justified and quantifiable). For this reason, maybe I am not too surprised that when Dr Nakamura of UCSB wrote a letter to Nichia with the offer to meet them, they responded with "don't waste your time, we haven't had anything to do with you for 15 years". Nakamura was "disappointed" by this reply.

It's perhaps sad but it also shows that research isn't everything. Nichia is probably not imagining that similar people are worth an infinite amount of yens.

I have often been thinking about this issue – how important the mankind's "know-how" is relatively to the hard work that people had to do in the past. Although I am naturally coming from the "idealist" culture that tends to say that "the great advances are almost everything", I actually have some doubts about the conclusion.

Imagine that we have all the know-how, physics knowledge, projects, schemes, and so on, but all the "physical products" that people have ever made are gone. In particular, imagine that all the buildings, bridges, and similar constructions in the world disappear. How much time would be needed to get approximately to the point where we are today?

You would still need a very long time – decades and perhaps centuries – to build everything that needs to be built. We just don't know how to speed up the construction "dramatically". Meanwhile, you would have to produce enough food for the construction workers to have enough energy, and so on.

To summarize, it is clear that the existing inventions and knowledge of science and technology that we possess today are extremely valuable and strikingly distinguish our civilization from the civilization of the 15th century or the Ancient Mesopotamia (which had to be great, but still deficient relatively to the present in various ways).

On the other hand, one shouldn't exaggerate the importance of the growth and of the inventions and discoveries from the most recent years. To express my guess a bit more quantitatively, I would say that the the total value of the inventions and discoveries of the recent 50-100 years is approximately equal to all the "hard straightforward work" that the people have done as of today.

Make no doubts about it: research is important and its results in the last 50 years may be as valuable as the value of the "hard straightforward work" in the same 50 years. If true, that would be a great result for research that only devours a few percent of the world's GDP. On the other hand, I wouldn't rate the results of research higher than that – as giving us much more than the "hard straightforward work" does.

And discoveries like the blue LEDs are nice but to some extent, they should be counted as "business as usual" in similar Nichia-like (and academic) research centers, not as "unpredictable, exceptional, and unprecedented revolutions".

What do you think?

1. Superb comment!
We gloss over the reality that hard work is the essential, without which even the most brilliant insight lies fallow.
Meanwhile, it is too bad that Nichia is so hidebound. Having a Nobel winner on their resume surely would help their recruiting as well as their reputation in Japan. Just because he forced them to disgorge some serious cash 15 years ago is not an adequate reason to stay in a snit.

2. Nichia Corporation's Employment Terms & Conditions (full version):

Or your brue berong to us.

Sign here _____________________

3. You need the tools to build the tools and so on and so on.

4. Japanese culture does not contain the Newtonian spectral octave. "Blue" there is turquoise here. Nakamura's diodes emitted what became "true blue." Thus, "all your true blue are belong to us," and conjugated in the appropriate level of politeness (dock worker).

5. The material and its fabrication were chemistry. Making it perform was physics. Chemistry is stuff, engineering is things.

In my youth I sat outside a large carved solid oak door waiting to educate upper management. Through that fine wood there oozed "bring in the lab nigger." Sales & Marketing get commissions, not I. Surviving industrial research requires outstanding work at the bench, then throttled disclosure,

6. And discoveries like the blue LEDs are nice but to some extent, they should be counted as "business as usual" in similar Nichia-like (and academic) research centers, not as "unpredictable, exceptional, and unprecedented revolutions". What do you think?

I think that Newton and Faraday didn't try to charge someone when they published their fundamental insights into the natural world. If you think that's a little long ago, then note that Tim Berners-Lee hasn't tried to patent the WWW...

7. There is a fuzzy boundary between physics and chemistry. As a solid-state physicist I had to get seriously involved in chemistry but I would put my professional activities as 80% physics and 20% chemistry. I am very familiar with Nakamura’s work and I would judge it as, perhaps, 40% physics and 60% chemistry so his Nobel could have gone either way.
He did find the holy grail of solid-state optics from a practical standpoint. His gallium phosphide LED has enabled the total revolution in lighting that has just occurred. It is said that Nakamura made the most important invention since the light bulb.
Nichia’s pique is due, no doubt, to Nakamura’s egregiously non-Japanese behavior and also to the fact that other companies have profited far more from their investment than has Nichia. Cree is the most notable but the total revenue will be many tens of billions.

8. One strongly suspects that if they spent less time arguing over a few million they could have focused their energy on making billions.

9. One could even argue that the 2014 physics and chemistry prizes should have been swapped...

10. Believe it or not, it is not uncommon in the US legal system for people to file dubious lawsuits, and get a lot of money out of them. For some reason, the people from whom the money is exacted tend to feel a little abused.

I think that von Mises fairly convincingly discussed one subject I think you are trying to address (the relative importance of capital and technology) and came down on the side of capital (big surprise).

11. I had exactly the same feeling!

12. Nice post. It brings a few questions to my mind. First, how should the company/researcher contract be structured so that it is a win-win. If a researcher doesn't participate in the future earnings of their innovation, will they be motivated? Will they take their ideas elsewhere?

Another question might be, if the first innovator didn't exist and we had to wait for the second, what would our economy look like today? For example, if Bell didn't invent the phone and we had to wait for Edison. In this case I think our growth rate would have been diminished somewhat over the last two hundred years, maybe by a few tenths of a percent. Maybe we'd be living with 80's technology today?

Lastly, can't the Nobel Committee change their criteria? It would have been a shame if the 2013 winners had been denied due to an actuarial event. Maybe there's legal restrictions? Maybe the heirs need to be convinced? Are important physical "proofs" becoming less frequent now that we appear to be at the approaching the limits of what is observable (if not inferrable)?

13. Proof that Nobel Laureates are not immune to stupidity:

http://www.theguardian.com/science/2014/oct/07/nobel-laureates-call-for-a-revolutionary-shift-in-how-humans-use-resources

14. A prospective employee is free to negotiate any employment contract that he can get but, remember, the reason that the company supports R&D is for future gains. It surely is a win-win situation already and I don’t know of a single situation in which intellectual property coming out of R&D is contractually shared with the inventor. Many companies are quite generous to their inventors, of course.

15. Dear Gene, it's a totally plausible setup that the inventor gets just a salary and nothing else if he finds something.

I just doubt that it's the best setup for the company itself. It's communism and fails to motivate the inventor.

16. Dear Luboš,

"I just doubt that it's the best setup for the company itself. It's communism and fails to motivate the inventor."

That's very much my instinctive reaction too. As AJ suggests above, a win-win contract of some sort seems far better. (Actually, what you call communism above seems more like feudalism to me, but who cares since they're both as bad as each other the distinction is pretty much irrelevant.)

I was thinking of the practicalities though. A 'gentlemen's agreement' won't cut it — especially not when big money is involved, and in any event personnel and management practices can change rapidly.

Then there's the 'team' issue. The golden-fleece of a discovery/invention may have been a joint effort by any number of people, with a lot of synergy* from various disciplines. On top of that, it may be that a junior member of the team came up with the crucial inspiration. How does one build all these factors, and more, equitably into a contract ahead of time? Are there any other factors that haven't been thought of? Of course there are but one only finds out about them after the event, as soon as the ink is dry usually. :) That's Sod's Law operating, efficiently as ever.

Imagine then the potential for disputes and litigation. Oh, the lawyers would LOVE such contracts.

But this lack of proper reward occurs all the time in corporations at a far more mundane level anyway. A great deal of it is subjective too. Some conscientious employees are worth their weight in gold, and while many are justly rewarded for their efforts, their innovative and helpful ideas, their encouragement of others ... many just get screwed by the corporate system or bosses who, frankly, are shits. Tough. That's life. They should take their talent and seek out a greener field if they can. But all this low-level stuff applies to researchers too.

That's a lot of crap to handle in a written contract. Perhaps that's why it's so much easier for the corporation (assuming it's decent) to say to a potential recruit, "Yes, we'd like to give you a fair crack and embody our honest and equitable intentions towards you in a nice contract, but do you have any idea how fucking difficult that would be to arrange in practice and ultimately how expensive it could prove for the corporation? ... yadda yadda ... So here's the deal ... take it or leave it." :)

I don't know. But it strikes me as a huge can of worms. Pity.

They should at least have a decent employee share scheme though, so there's some alignment of interests.

* Incidentally, how does one split the share of the rewards allocated to synergy? The corporation supplied the set-up that enabled it, and without which there presumably wouldn't have been any. But then without the participants themselves there wouldn't have been any either. [Wanna call in a crack team of lawyers and yooman-resources consultants for a king's ransom to help you decide? Blow that! :) ]

17. I enjoyed this John. Thanks.
Management control systems are tricky. Employee share plans do seem to be the approach that sucks the least :)

18. If I see farther than others, it is only because I am surrounded by dwarves.

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