Intellectual Property for Open Innovation

February 10, 2020

SAWAI Tomoki
Director
WIPO Japan OfficeBefore and After: The Establishment of the Patent
System in Japan in 1885
GAUN Tatsumune (1842-1900) and TOYODA Sakichi (1867-1930)“Gara-bou” spining machine, invented by GAUN Tatsumune in 1876
Toyota Commemorative Museum of Industry and Technology
1US: Dramatic Increase of R&D Investmentby the Private Sector under Pro-patent Policy
The US’s R&D investment, GDP, and patent filings
Patent application

Mil. $Anti-patent

Pro-patent

R&D Investment

Patent Filings

Federally Funded
Nonfederally Funded

Young Rport

Unit: bill. dollars

C.A.F.C

Bayh–Dole Act

Source:Preface of the Young Report (1985): “That first sputnik wounded our pride, strengthened
our resolve, … What this country needs today is to have the Japanese launch a Toyota
into space. Or perhaps a Sony Walkman.”2

Rapid Growth in the Ratio of Intangible Assets in
Corporate Valuation
Tangible Assets vs. Intangible Assets for S&P 500 Companies
1975 - 2018

Source: 2019 Intangible Assets Financial Statement Impact Comparison Report (Aon Empower Results, April, 2019)

WIPO FOR OFFICIAL USE ONLY

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Increased Importance of Innovation
Top five strategic priorities over the next 3 years

WIPO FOR OFFICIAL USE ONLY4

The Heads of Both the US and China Pointed Out
the Importance of IP
President Trump:“To maintain and reinforce oureconomic competitiveness, we must
protect intellectual property andrelated technologies so that newindustries and innovations can flourish.”-- Proclamation on World Intellectual Property Day,issued on April 25, 2019

President Xi Jinping:“We will reinforce the protection of IP to further utilize thecreation of knowledge and to decrease technology gap.”-- The Second China International Import Expo, November 5, 20195

Japanese Companies NOT Confident in their IP
Strategy and Business Alliances
Survey on the strong points of Japanese companies (24 items in total)
Rank

ItemPoints*

Ability to Respond to Needs

0.82

2

Trust from Customers

0.72

11

R&D Ability

0.23

12

Ability for Product Design

0.19

21

IP Strategy

0.01

21

Stragegy for International Standard

0.01

21

Utilization of IT

0.01

21

Business Alliances

0.01

…

1…
*Points are averaged by rankings of companies surveyed: 1st rank (3 points), 2nd rank (2 points), and 3rd rank (1 point)
Source: Survey by the Ministry of Economy, Trade and Industry (December, 2016)6

CEOs Worldwide Consider “Strategic Alliances” more
Important than “Organic Growth”
Most important strategies to drive growth over next 3 years

The need for Open Innovation has increased
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IP strategy is Essential for Open Innovation
Product life-cycles haveshortened due toincreasing globalizationand commoditization.

To remain competitive,
it is essential forcompanies worldwide
to embrace OpenInnovation for thecreation of value.

IP activities such as inand out- licensing arekey to effectively
execute OpenInnovation.

Source: “Top 10 Lessons on the New Business of Innovation,” MIT Sloan Management
Review, 2011, in “How to Implement Open Innovation – Lessons from Studying Large
Multinational Companies,” University of Cambridge,
http://sloanreview.mit.edu/files/2011/06/ INS0111-Top-Ten-Innovation.pdf
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Open Innovation: Japanese Companies Behind theTrends of American and European Companies
Trend of licensing-in from external
resources (past 10 years)
Never20%

Decreased

8%

9%

5%
5%

10%

30%

35%

58%

55%

US(n:33)
米国企業

Europe(n:20)
欧州企業

36%

Decreased

4%

Stable

46%

33%

23%

Japan(n:355)
日本企業

Increased
US(n:33)
米国企業

Europe(n:21)
欧州企業

Trend of cross-licensing (past 10 years)
9%
3%
39%

Never

12%

48%
64%

Increased

Never

27%
57%

StableTrend of purchasing IP rights fromexternal resources (past 10 years)

18%
5%

14%
Japan(n:355)
日本企業

Source: “Report on the Survey of Procurement Strategies of IP
Resources,” 2012, Project to Promote the Strategy of Obtaining
IP Rights Internationally, Japan Patent Office36%
Decreased
StableIncreased

5%

50%

41%
52%
27%

15%
Japan(n:355)
日本企業

US米国企業(n:33)(Europen:22)
欧州企業
WIPO FOR OFFICIAL USE ONLY

9Global IP Strategies: Japanese Companies Behind
American and European Companies
Number of patent filings in foreign countries
x（万件）
10,00025

Japan

USEurope

China

Korea

IP Offices that received
applications

20

Others than IP5South Korea

15

China

10JapanEuropeUS50
20132014201520162017

20132014201520162017

20132014201520162017

20132014201520162017

20132014201520162017 （年）Number of patent filings in foreign countries other than IP5（万件）
x 10,00010Japan

USEurope

China

Korea

8Offices receiving
applications
Others6Canada4

MexicoRussiaAustraria

BrazilIndia

2ASEAN020132014201520162017

20132014201520162017

20132014201520162017

Source: WIPO IP Statistics Data Center WIPO FOR OFFICIAL USE ONLY

20132014201520162017

20132014201520162017 （年）10P&G: Transformation from “NIH” to “PFE”
Case Study

2000: A. G. Lafley became the CEO of P&G• Announced the start of the Connect and Development Strategy,
which aimed to obtain 50% of innovation from external sources• Transformed the company’s culture from NIH (Not Invented Here)to PFE (Proudly Found Elsewhere)
x100mil. $x100mil. $Sales (left)
Net Profit (right)

C&D
Strategy

Huge increase insales and net profit
after 2000
Source: METI, 2014,
https://www.meti.go.jp/shingikai/sankoshin/sangyo_gijutsu/kenkyu_hyoka/pdf/004_ 11
s01_00.pdf

Google: Expanded its business based on key searchtechnologies while reinforcing its patent portfolio
Case Study
1998: Start of Business
Inventor: Lawrence Page (Google Co-Founder)

1998: Core Patent Application
Patent Gazette on ranking techniques ofsearch results, a core technology of theGoogle SearchExaminer：Thomas Black, Uyen Le

US6285999B1

2011 to Present: Expansion of Patent Portfolio
e.g. acquisition of Motorola

2017
Filing on Smart Speaker

2016
Filing on Smart Glasses

Source: Survey by Deloitte
Tohmatsu Financial Advisory LLC■Patent filings■Acquisitions ■Purchases

US2017-0332035A1
US9807490B1

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Amazon: Dramatic Growth from “1-Click” Order Patent
Case Study
Amazon developed and patented its game-changing “1-Click” order technology
within its first few years of businessWith their “1-Click” technology a customer could purchase an
item immediately without going through a shopping cart screen!
1. IP rights on core innovations
Amazon filed a lawsuit against
Barnes & Noble, one of thelargest booksellers in the US, forpatent infringement and obtained
an injunction remedy.

2. Income from Licensing
Obtained huge revenue throughlicensing to other companies

As a result, the stock price of
Amazon drastically increased.

The highest in some
10 years from thestart of business3. Steady increase in sales
over term of patent protection
Term of patent protection

Licensing
AmazonOthers

License fee
Source：Otani, Hiroshi, “The Roles of PatentApplications in the Competitive Advantage ofStart-ups,” Data retrieved from nasdaq.com(2015/01/15)

Source: “Apple, Amazon.com ‘1-Click’
Patent and Trademark License,” Apple
Press Release, September, 2000,
https://www.apple.com/jp/newsroom/2000/09/18Apple-Licenses-Amazon-com-1-ClickPatent-and-Trademark/Source: Data retrieved from EDGAR, theUS’s electronic disclosure system,
https://www.sec.gov/cgi-bin/srch-edgar（2018/05/27)

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Asahi Kasei Corporation: Dr. YOSHINO Akira,2019 Nobel Prize Winner in Chemistry
Case Study“Patent rights on the lithium-ion battery and their proper
licensing to others greatly contributed to expanding its market.”-- Dr. YOSHINO, Nobel Laureate

Dr. Yoshino (right) and Mr. Sawai (left) on the eve of the European Inventor Award 2019 held in
Vienna, June 19, 201914

Conclusion: IP strategy is Essential for Open
Innovation
Product life-cycles haveshortened due toincreasing globalizationand commoditization.

To remain competitive,
it is essential forcompanies worldwide
to embrace Open
Innovation for thecreation of value.

IP activities such as inand out- licensing arekey to effectively
execute Open
Innovation.

Source: “Top 10 Lessons on the New Business of Innovation,” MIT Sloan Management
Review, 2011, in “How to Implement Open Innovation – Lessons from Studying Large
Multinational Companies,” University of Cambridge,
http://sloanreview.mit.edu/files/2011/06/ INS0111-Top-Ten-Innovation.pdf

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Thank you so much for your attention!
Let’s meet again at

World IP Day Memorial Symposium
Date: April 27, 2020
Venue: Iino Hall (Chiyoda-ku, Tokyo)

WIPO Japan Office

Daidoseimei Kasumigaseki Bldg. 3F
1-4-2 Kasumigaseki, Chiyoda-ku, Tokyo
03-5532-5030
japan.office@wipo.intwww.wipo.int/japan

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