This paper focuses on katakana compounds with daun (or “down”), and discusses whether word-formation rules can be established to explain productivity of “down” words. It further discusses how katakana words with “down” have grammatically or semantically deviated from their original English sources. It was discovered that among Japanese English (= JE) words and words classified as both loan words and Japanese English words (= LW-JE words), the most notable, common semantic feature of the morpheme daun is “lowering, decreasing or reducing.” Also, unlike the English “down,” the Japanese daun is not an adverb but a noun, and it is very productive for coining new compounds. The formal representation of the productive JE noun phrase formation with daun can be described as: [NOUN + [daun]N ]NP (under the semantic condition that the NOUN must be decreasable or reduceable). This rule produces many JE words, including puraisu-daun (lit. ＊ price-down) and reberu-daun (lit. ＊ level-down). Some Japanized English words are morphologically unique or semantically anomalous as in the JE compound supîdo-daun (lit. ＊ speed-down). In English “speeding” means going fast or doing things fast, while “down” means reducing the speed. Thus, the compound supîdo-daun is a semantic contradiction.