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Research Activity Summary of FY2008

1. Community Patent Review

   Against the backdrop of an increasing number of patent applications and a prolongation of waiting period for a first action, prompt and precise patent examination is nowadays desired in all countries of the world along with the maintenance and improvement of the quality of patent examination. Against such background, movements to consider Community Patent Review (CPR) have been making progress in recent years with the aim of further improving the efficiency and quality of patent examination by promoting public-private work-sharing in patent examination. CPR is a system where a community consisting of ordinary people such as researchers and engineers conducts reviews including a submission of prior art and a posting of comments as materials to be used for the patent examination through the Internet.

   This study was conducted in order to investigate and analyze the effectiveness of CPR in Japan by implementing CPR on a trial basis as well as to conduct surveys on CPR-related legal systems and the implementation status of CPR in the United States.

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2. Further Exploitation of Intellectual Properties

   In recent years, the number of the transferring of the patent right has been increasing as activating the company recognition across the border, and so on. Against this background, the Patent Act was revised from a licenser’s standpoint. The registration system of license to the right to obtain a patent is established, and the disclosure of the registration for non-exclusive license is limited, and so on. In the discussion of this revision, two points of the argument was left. One issue is the patent law system for exploitation of the right to obtain a patent, and the other is of the monopolistic non-exclusive license.

   Because of these factors, this research and study was executed about the patent law system for exploitation of the right to obtain a patent, and of the monopolistic non-exclusive license. This study and research was executed through the establishing a committee, the questionnaire surveys, the interview surveys, and the overseas surveys.

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3. Various Issues Related to a Revision of the Similarity-Based Groups Defined in the “Guidelines for Examination for Similar Goods and Services”

   “Guidelines for Examination for Similar Goods and Services” (hereinafter referred to as the “Similarity Guidelines”) play an important role in the examination for trademark registration by Japan Patent Office and in the application/registration practices by trademark applicants and attorneys. However, the scopes of similar goods in the Similarity Guidelines have not been drastically revised since first it was introduced in 1960. Also the scopes of similar services have not been revised since 1992 when the service mark registration system was introduced. Therefore, the current Similarity Guidelines cause complaints in the relevant sectors that they are not in conformity with the current business practices. It is also pointed out by Industrial Structure Council and Intellectual Property Promotion Plan of the Prime Minister’s Office that the scope of similar goods/services in the Similarity Guidelines should be revised in order to reflect the current business practices.

   Under the circumstances, we established a research committee of experts and conducted variety of researches and surveys in and outside Japan, to seek some directions and solutions for the expected problems arising out of the possible revision of the Similarity Guidelines.

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4. Desirable Financial Policies and Fee Systems for Industrial Property Rights

   Desirable financial policies and fee systems for industrial property rights is changing, reflecting current social conditions. For instance, there is so-called License of Right system, which is a fee system giving a discount to a patentee who has registered his willingness to license his or her patent to a third party. As License of Right system is considered to facilitate open innovation, the need to introduce the system into Japan is increasing.

   On the other hand, there is a fee system giving a discount to applicants and right holders who meet certain requirements, if they are universities, individuals, small entities. This system is also considered to facilitate innovation.

   In this study, the financial policies and fee systems of other countries intellectual property offices and are surveyed and the desire and situations of domestic universities, research institutions, companies, etc are surveyed. Desirable financial policies and fee systems were reviewed on basis these survey and analysis.

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5. Investigation of Preventing the Abuse of Patent Rights that Inhibit Industrial Development in Japan

   It is said that, in the United States, there are multiple cases in which a person who is not running the business of manufacturing, selling, etc. for him/herself acquires and exercises a patent right for the purpose of obtaining a settlement or a license fee with the use of the patent right. Some people call some of such persons “patent trolls.”

   Although there is no court precedent regarding a case equivalent to the aforementioned cases in Japan, the industrial circle is expressing concern that cases of the same kind as those in the United States are also arising in Japan. With regard to those cases, consideration from a legal standpoint has been requested.

   In this study, a committee consisting of intellectuals conducted legal analysis of so-called patent trolls based on the assertions made and problems raised by the industrial circle, and held discussions on the question of whether to take measures, including guidelines.

   In addition, the committee compared the systems of Japan and the United States in order to consider so-called patent trolls. Moreover, the committee also analyzed and examined recognition in Japan on the basis of the results of questionnaire and interview surveys.

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6. Handling of Intellectual Property Rights in M&A

   M&A (business reorganization) is an option for one company to buy the business of another company, with other company’s patent and other intellectual property rights included, as a means to keep growing its own business while saving temporal cost. Japan has finished legislation of relevant laws such as Companies Act, and is entering the age of M&A. The purpose of this surveillance study is to research and analyze intellectual property related issues that are problematic in M&A to provide a baseline for discussing the handling of patent and other intellectual property rights in business reorganization. In this report, M&A transaction methods permitted in our country (Japan), the United States, and the United Kingdom are explained, first. Subsequently legal issues pertaining to the Industrial Property Rights Act and related acts, for instance, a reasonable remuneration pertaining to employee’s inventions, treatment of license agreements etc. are gathered up by each M&A transaction method. In addition, issues and points of concern pertaining to M&A transaction and due diligence are analyzed. Furthermore the way of the valuation of intangible assets, accounting issues and tax treatments are mentioned. Finally the result of this surveillance study is analyzed with the cooperation of experts.

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7. The Trends of Applications for Industrial Property Rights in Japan

   In Japan, the government formulates the “Intellectual Property Strategic Program” with the aim of strengthening international competitiveness and revitalizing economy, and is implementing measures concerning intellectual property. With the recent development of intellectual property-related policies, companies are also strengthening activities concerning the protection and exploitation, etc. of their own intellectual property. In planning the intellectual property-related policies of Japan, it is considered important to deepen discussions with a common view that is based on statistical analysis.

   In light of such circumstances, in this survey, we conducted eight empirical analyses in total with regard to the relationship between corporate reorganization, which has been actively conducted in many industries in recent years, and patent filing/R&D investment, the existence of a solid patent production function designed to make it possible to predict the number of patent applications, uncertainty in the substantive examination of patents and its influence on companies’ application behavior, the relationship between design rights and corporate value, use structure of patents and profitability of R&D, pro-patent system reform and innovation, and measurement of patent premium.

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8. Japanese Guidelines on Standardization and Patent Pool Arrangements: Practical and Legal Considerations under the Current Antimonopoly Act - A Global Perspective
Monica Armillotta
LL.M. in IP, Doctoral Candidate at the Max Planck Institute for Intellectual Property, Competition and Tax Law / Munich Intellectual Property Law Center, Munich, Germany
(Invited Researcher, Institute of Intellectual Property)

   Patent pools are essentially agreements where different patent holders "pool" together, i.e. assemble, their respective technologies in order to license them as a unique "package" to third parties. Nowadays, in response to the globalization of technologies and more severe conditions of competition, resulting in a faster pace for innovation also at international level, technology pools have gained increasingly relevance, as successful cooperative IP licensing models.

   Reflecting the importance won by such institutions, the purpose of this research is to outline the defining features and the strategic considerations underlying the establishment of patent pools, both in a legal and empirical context, in order to identify what are the best conditions for such cooperative practices to prosper in a competitive setting, with a view of cultivating innovation.

   In this respect, attention will be brought both on the internal organizational framework adopted, with regard to the particular nature of the technologies involved, and on the legislative treatment that patent pools have been reserved in different jurisdictions, by summarily comparing US, EU and Japan, the latter having adopted in relation to the other systems in consideration the most recent Guidelines on "Standardization and Patent Pool Arrangements".

   Finally, there are many questions still to be answered, and correspondingly many new fields of application where the successful implementation of patent pools still needs to be explored. However, within the scope of this project, the present research hopes to shed at least some light and raise interest on such collaborative IP mechanisms and their goal to promote technology access.

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9. Patent Thickets and Refusals to License in the Life Sciences in Japan - Legal Remedies at the Interface between Patent and Competition Law
Esther van Zimmeren
Research Fellow FWO, Center for Intellectual Property Rights,University of Leuven, Belgium
(Invited Researcher, Institute of Intellectual Property)

   Concerns have been expressed on the growing number of patents in the life sciences. High numbers of patents might cause “patent thickets” and will increase the risk that one of the patentees will refuse to grant a license. These two phenomena might ultimately block R&D and commercialization in the biomedical industry. Is there indeed a patent thicket in the biomedical field in Japan? And are there cases of refusals to license? If so, what are the potential remedies?

   This kind of problems is not necessarily solved by way of legislative reforms. Legal instruments which already exist in the patent act (e.g. research exemption, awards for non-exclusive licenses) and voluntary patent licensing schemes (e.g. patent pools, clearinghouses) might be more appropriate. In addition, there might be a need to further clarify, strengthen or stimulate these instruments. Some of these solutions, such as for instance patent pools are common in other sectors, but have not been established in the life sciences. Intermediaries, such as clearinghouses, already exist, but their role on the market for technology exchange might be further stimulated by policy initiatives.

   Both the problems and possible remedies will be reviewed from an innovation policy perspective, in particular from the so-called “open innovation”-paradigm.

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10. Legal Protection of Design or Applied Art - With the focus on the comparison of the Korean and Japan legal approaches to design law, unfair competition law and copyright law for design -
Sangyook Cha
Partner, Sang Rock, Law Office, Seoul, Korea
(Invited Researcher, Institute of Intellectual Property)

   This report focuses on comparative study and analysis of the Korean and Japanese legal systems that were constructed to protect works of applied art and designs, from the perspective of comparative law. This report particularly purports to conduct comparative study on the Copyright Acts of the two countries, the Design Protection Act of Korea and the Design Act of Japan as well as the Unfair Competition Prevention Acts of the two countries, and to survey the legislative stance and status of the application of legal protection of works of applied art, thereby to infer points at issue while taking into account the judicial precedents of the two countries.

   An overall review of the Korean laws and the Japanese laws concerning protection for works of applied art reveals that those works are protected by the Design Protection Act and the Design Act, and by the Copyright Act. In addition, those works are protected in a supplementary manner by the Unfair Competition Prevention Acts of both countries. With regard to overlap protection by the Copyright Act, Korea provides protection for works of applied art by expressly mentioning such works in its Copyright Act. In contrast, the Japanese Copyright Act does not clearly indicate whether such works are protected, and judicial precedents show that such works are protected as works of art only in limited cases. Therefore, it can be concluded that Korea is more willing to provide overlap protection by the Copyright Act than Japan.

   For protection of works of applied art under the Copyright Acts of both countries, especially with regard to criteria for judging copyrightability of those works, the Korean Copyright Act needs to clearly establish criteria for originality, and Japanese judicial precedents need to clearly establish criteria for originality that are identifiable with those for works of fine art.

   The Unfair Competition Prevention Acts of both countries protect, for instance, containers or packages, etc. of products by the provisions concerning acts of causing confusion, including acts of causing confusion with another person’s goods and acts of causing confusion with another person's commercial facilities or activities, acts of diluting famous trademarks or acts of abusing famous indications. The Unfair Competition Prevention Acts also protects product shapes by provisions concerning restrictions on dead copies which provide that acts of unfair competition are to include acts of imitating the product shapes of another person’s goods and transferring or otherwise handling them. Those provisions play an important function and role in protecting unregistered works of applied art and design. However, the protection for works of applied art, especially for product shapes, tends to be limited in terms of the protection period, the nature of protection, which takes the form of granting the right to exclude imitations, and applicability, which is narrowed by provisions about exemption of application. In conclusion, in both countries, the protection provided under the Unfair Competition Prevention Acts for works of applied art can be considered similar in general but different in details, such as the criteria for protection and the remedies against infringement.

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11. A Comparative Study of the United States, Japan, and Thailand Laws on Online Business Method Patents
Aunya Singsangob
Dean, School of Law, Bangkok University.
(Invited Researcher, Institute of Intellectual Property)

   This research focused on a comparative analysis of the U.S., Japan, and Thailand patent laws related to online business method patents. The purposes of the research include: (i) to study the concepts and characteristics of online business methods; (ii) to study the current situation of online business method patents, their economic effects on software industry and e-commerce growth, and legal controversy on online business method patents; (iii) to study and compare the U.S., Japan, and Thailand patent laws and judicial decisions related to business methods; (iv) to study the Agreement of Trade-related Aspects of Intellectual Property Rights (TRIPS) and European Patent Convention (EPC) regimes towards business method patents; and (v) to analyze whether a business method patent is the best way to promote innovation for the era of information technology in Thailand.

   It is found that business method patents are still debated so far. Regarding the U.S., software and business method patents have been recognized for decades. Recently, both the U.S. courts and the Board of Patent Appeals and Interferences (BPAI) of the US Patent & Trademark Office (USPTO) adopt the “machine-or-transformation” test to determine whether the claimed business method is a patent eligible subject matter. In Japan, a “technical feature” is a key element for determining business method patents. To be eligible for patent in Japan, business methods must use computers which provide concrete means in cooperation with software. In Thailand, by contrast, computer programs are excluded from a patent eligible subject matter. Thus, business methods are ineligible for patent in Thailand.

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12. Economic Analysis of Software Patent
Yasuhiro Arai
(Research Fellow, Institute of Intellectual Property)

   In this study, the author focuses on economic differences between copyrights and patent rights that have not been considered in existing studies, and considers the protection of the intellectual property rights for “software” that is protected by both of these intellectual property rights. Since the patent right is a right protecting “ideas,” by applying the patent right to software, it can prevent both the “copying of innovative ideas among manufacturers” and the “copying of software.” Meanwhile, the copyright protects “expression” so that if the patent right does not apply, it cannot prevent the “copying of innovative ideas among manufacturers.” Focusing on this point, the author analyzes which right is preferable for protecting software from the perspective of social welfare, the patent right or the copyright.

   The author considers this study to be important not only for the validity of software patents, but also for distinguishing the patent right and copyright in models from an economic perspective and to consider the protection of intellectual property rights from a more realistic viewpoint.

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13. Impact of Licensing Schemes on the Private Value of a Patent
Hiroaki Ino
(Invited Researcher, Institute of Intellectual Property)

   The market value of technology development is affected by patent license strategies. Two patent licensing systems are commonly used: the royalty system (a patent fee payment system based on production volume) and the fixed fee system (a payment system not affected by production volume). [Kamien Tauman, 1986] (hereinafter referred to as KT) made a comparison between the royalty system and the fixed fee system and game-theoretically demonstrated that the profits gained by technology innovators under the fixed fee system are greater than those gained under the royalty system. This finding, as an economic theory, contradicts the reality that the royalty system is adopted in many cases of patent licensing. Therefore, it is important to start by examining KT’s model and identify economic factors that could overturn said finding. In this study, we have analyzed the effects of various economic factors including the existence of uncertainty, possibility of in-house production, and difference in sales strategies on both licensing systems from the perspective of economics in order to determine what economic factors could limit the applicability of said KT’s finding.

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14. International Jurisdiction and Defends of Invalidity in Foreign Patent Infringement Action
- Analysis on Judgment on July 13, 2006 of ECJ (C-4/03) -
Manabu Iwamoto
(Research Fellow, Institute of Intellectual Property)

   Even if an infringement lawsuit is filed based on a foreign patent right, it is deemed that the court does not reject the suit on the grounds that it is a foreign patent right. With regard to a lawsuit that questions the validity of the patent granted in a foreign state itself, it is considered to be reasonable that the court in the country where said patent was granted has exclusive jurisdiction. In cases where invalidity is claimed as a “defense” against the foreign patent right in the infringement lawsuit, can the court in Japan then examine this suit? This is the topic of this study. In Japan, there are not many court precedents or previous studies concerning this matter. Meanwhile, the European Court of Justice rendered a remarkable decision on this subject on July 13, 2006. It raised considerable debate within Europe. On the basis of the current situation in Japan and of the abovementioned arguments in Europe, this study considers Japan’s responses to the defense of invalidity of a foreign patent, including the appropriateness of the defense.

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15. Do Mergers Promote Innovative Activities of Firms? Evidence from Japanese Patent Data
Isamu Yamauchi
(Research Fellow, Institute of Intellectual Property)

   The purpose of this study is to empirically analyze the impacts of merger on firms’ innovative activities measured by the number of patent applications and the R&D expenses. Furthermore, we focus on the changes in firms’ capability of using inventions, which is evaluated by the rate of the number of examination requests to the number of applications filed before merger.

   We find that the increase in the market share caused by merger has a positive effect on the number of patent applications and R&D expenses. On the other hand, the business streamlining or rationalization associated with merger has a negative effect on them, and it also reduces firms’ capability of using inventions. Moreover, various unobservable effects of merger, such as knowledge integration, shift of firms’ intellectual property strategy or business disruption, decreases the number of patent applications and R&D expenses as a whole, with keeping the capability of using technology unchanged.

   Our results also suggest that the technological similarity accelerates the rationalization of overlapping businesses, and enhances the efficiency of firms’ patent application behaviors.

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16. The Basic Analysis of Anticompetitive Effect on Patent Pools
Seiji Yamada
(Research Fellow, Institute of Intellectual Property)

   In this study, patent pool will be examined, which allows patentees to pool their patents and grant licenses to companies that hope to be licensed. In recent years, technical advancement and segmentation have accelerated especially in the fields where technological innovation is rapid. Consequently, companies often find their own patents insufficient to develop new products. Any company planning to develop a new product is required to carry out licensing negotiations with many patentees. The negotiation-related costs would impose a great burden on the company. As a solution, patent pools are gaining attention. However, since the purpose of patent pools is to centrally manage patents owned by many patentees, some people are concerned that patent pools could function as cartels and have an anticompetitive effect. In this study, it will be examined by using an economic theory model whether patent pools have a latent anticompetitive effect or not. Furthermore, based on various patent data, we will analyze whether patent pools have affected corporate research and development activities.

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17. Patent Applications for Inventions Made by University Researchers in the Field of Biotechnology

   The 2006 revision of the Fundamental Law of Education clarified that universities were expected not only to engage in education and research activities but also to contribute to society. Since April 2004, in which national universities were transformed into independent administrative institutions, an increasing number of universities have adopted an intellectual property policy of claiming ownership of intellectual properties created by their researchers in principle (institutional ownership). As a result, patent applications owned by universities have been on the rise.

   Despite such an intellectual property policy, some universities still allow their researchers to claim ownership of their inventions (researcher ownership). Furthermore, there are universities that have not adopted any intellectual property policies. Some universities always recognize researcher ownership of an invention and do not recognize institutional ownership thereof. In these cases, it may be presumed that many of the inventions made by university researchers are owned by those researchers or by the companies that conducted the research jointly with those researchers.

   The purpose of this report is to outline the characteristics of patent applications for inventions made by university researchers in the field of biotechnology by database analysis and a domestic interview survey and to conduct a comparative analysis on the patent applications’ ownership. Based on the analysis results, this report explores how to facilitate transformation of university research findings into intellectual properties and make effective use of those properties for the benefit of society. The goal of this study is to make constructive proposals.

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