In fact, it was the Holy Grail of lighting technology: the blue light-emitting diode, or L.E.D., which made white light a reality. It offers the prospect of a cheap, long-lasting light source that is expected to, someday soon, replace Edison's incandescent light bulb.

The invention spurred rapid growth at the company, Nichia, which now has 3,500 workers and enjoys a 50 percent profit margin on $1.8 billion revenues. But in keeping with the Japanese belief that all salarymen are equal and that the company stands above all, the man who led the inventing team was awarded a bonus of merely $200.

But the man, Shuji Nakamura, did not take the move in Japanese stride. He quit, left for a new job in America, and eventually sued. The lawsuit was settled recently, though not amicably, for $8.1 million.

Almost a generation after the peak of Japan's economic might, companies here are being forced to struggle with ways to reward their most talented workers while hewing to their intrinsic egalitarianism. As globalization has allowed talented workers to job-hop across continents, some here -- who would have willingly sacrificed themselves for their companies until a few years ago -- are saying that all salarymen are not equal.

About 10 other inventors have also sued their employers, doing the unthinkable in this society that values teamwork above individual talent. Arguing that their individual talent led to huge discoveries and profits at companies like Toshiba, Canon, Hitachi, Ajinomoto and Mitsubishi Electric, they have sought money. A lot of money.

''The lawsuit changed the system in all companies in Japan in which scientists and engineers were poorly treated,'' Mr. Nakamura, now a professor of materials at the University of California, Santa Barbara, said in an interview during a recent visit to Tokyo. ''I'm very much satisfied by the results that the lawsuit has brought about.''

Experts agree that the effects of this lawsuit -- which was led by Hidetoshi Masunaga, a lawyer who is also involved in some of the other suits -- will reach beyond the treatment of inventors.

''Such scientists are the forerunners of a changing mind-set among Japan's salarymen,'' said Shigeru Tanaka, president of the Hay Consulting Group in Japan. ''They have ownership of their own career development. Nakamura is not an ordinary person, but his case forecasts change among Japan's ordinary salarymen.''

Time was, most employees' pay rose according to seniority inside companies where they enjoyed lifetime employment. More recently, to encourage and reward good employees, many companies have introduced performance-based pay systems.

But the new systems have not been considered successful. They had the opposite effect of lowering morale among employees, who, thinking that missing a target would hurt their careers, tended not to set high goals in the first place.

''Now with the performance system, frustration seems to be everywhere, with some people not receiving what they expected or some people getting younger colleagues as bosses,'' said Taisuke Kato, general manager of the intellectual property division at Toshiba Corporation. ''In the United States, companies can keep employees with high ability and lay off employees not so highly regarded. But in Japan you cannot do that. There are employees who are no good. But we should consider how to survive as a whole.''

Toshiba's employees can now choose to have their salaries tied to seniority or performance. The company, which is being sued by a former employee over the development of flash memory technology, has also established clearer guidelines to reward its most talented engineers. Every year, nearly 100 of its researchers receive bonuses of more than $10,000 and several of them get more than $100,000.

The sums, though, pale next to what their American counterparts would get in stock options or the amounts claimed in the recent lawsuits. Last year, for instance, Ajinomoto had to pay more than $1 million to a former worker. But it was Mr. Nakamura's case that drew the most attention through the size of the award, though it was significantly lower than the $200 million that a lower court had initially awarded. The lower court had estimated at 50 percent Mr. Nakamura's contribution to the profits earned by his former employer, but the higher court said it was actually closer to 5 percent.

In the end, both sides agreed to settle, with Mr. Nakamura receiving $8.1 million from Nichia. But the settlement satisfied neither side as it left unresolved the crucial question of whether it was the individual or the company that was behind the invention.

Although it has grown considerably in the last decade, Nichia, a longtime maker of fluorescent devices before the L.E.D., has not changed much, employees say. It is an hour's drive from the nearest airport in Tokushima, on Shikoku, the smallest of Japan's four main islands. Its owner famously lives in a modest house. The lives of its bachelor engineers follow an arc that goes from their homes to work to the convenience store and back.

The consensus at Nichia was that though he was the project's leader, Mr. Nakamura could not have invented the L.E.D. in 1993 without the support of the company or colleagues. Until he left, Mr. Nakamura, though a hard-driving boss, had been respected here.

Masayuki Senoh, 39, and Shinichi Nagahama, 38, both worked under Mr. Nakamura on the L.E.D. team.

''Anyone can see that it was not accomplished just by Mr. Nakamura,'' Mr. Senoh said. ''No one can do it alone. There was data that I created, data that Nagahama created.''

Mr. Nagahama said he still had fond memories of the Mr. Nakamura who worked here. ''Now he's changed,'' he said. ''Now his eyes have dollar marks in them.''

Although Nichia's rapid growth has drawn many employees from other companies, there remains a deep belief here that one should not put individual interests before the company's and that it is unseemly to demand a greater share of profits. In a country where the stock market still draws few individual investors, Mr. Nakamura stood out here for his interest in money.

''He did like money,'' Ichiro Matsushita, 45, an assistant senior manager who was considered Mr. Nakamura's best friend here and spoke of being ''betrayed.'' ''During the bubble years of the early 1990's he was talking about stocks.''

Mr. Nakamura said it was natural to receive compensation commensurate to ability. ''There are still people in Japan who think money is something evil,'' he said. ''But why are they working then? If they do not need money, they should donate it. You work to earn money. But in Japan, that idea has a bad image and you're not supposed to say that. It's your real feeling against what you say in public. I say what I really feel.''

Photo: Shuji Nakamura got only $200 for developing the vastly profitable blue light-emitting diode. He sued, and settled for $8.1 million. (Photo by Franck Robichon/European Pressphoto Agency)

Map of Japan highlighting Anan: In Anan, one idea brought a small outfit revenues of $1.8 billion.