In the early 2000s, Nakamura had a falling out with his employer and, it seemed, all of Japan. Relying on a clause in Japan's patent law, article 35, that assigns patents to individual inventors, he took the unprecedented step of suing his former employer for a share of the profits his invention was generating. He eventually agreed to a court-mediated $8 million settlement, moved to the University of California, Santa Barbara (UCSB) and became an American citizen. During this period he bitterly complained about Japan's treatment of inventors, the country's educational system and its legal procedures.

..."Before my lawsuit, [Nakamura said] the typical compensation fee [to inventors for assigning patents rights] was a special bonus of about $10,000. But after my litigation, all companies changed [their approach]. The best companies pay a few percent of the royalties or licensing fee [to the inventors]. One big pharmaceutical company pays $10 million or $20 million. The problem is now the Japanese government wants to eliminate patent law article 35 and give all patent rights to the company. If the Japanese government changes the patent law it means basically there would no compensation [for inventors]. In that case I recommend that Japanese employees go abroad."