7 The Trends of Applications for Industrial Property Rights in Japan
In Japan, the government formulates the “Intellectual Property Strategic Program” with the aim ofstrengthening international competitiveness and revitalizing economy, and is implementing measuresconcerning 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 withregard to the relationship between corporate reorganization, which has been actively conducted in manyindustries 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 thesubstantive examination of patents and its influence on companies’ application behavior, the relationshipbetween 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.

Ⅰ Introduction
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 ofintellectual property-related policies, companies
are also strengthening activities concerning theprotection 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, andpatent filing/R&D investment, the existence of asolid patent production function designed to makeit possible to predict the number of patentapplications, uncertainty in the substantive
examination of patents and its influence oncompanies’ application behavior, the relationshipbetween design rights and corporate value, use
structure of patents and profitability of R&D,
pro-patent system reform and innovation, andmeasurement of patent premium. These surveys
have not been sufficiently analyzed in the past,and they are regarded as finding the possibility ofdeeper discussions with the use of new
subject-matter of analysis and data. They are also
regarded as leading to the future further
understanding of intellectual property-related
IIP Bulletin 2009activities in Japan.
Moreover, for the “Survey of Intellectual
Property-Related Activities” that was used forthese analyses and is the only statistical survey ofintellectual property-related activities in Japan,
we discussed the review of the survey itself as
well as the review of the method of estimating
the entirety and the classification of types ofbusiness, based on the results of the analyses inthis report, with the aim of further increasing theaccuracy of data.
It is desired that these studies will be usedas basic data for planning intellectual property
policies in Japan and used as basic data whencompanies, etc. formulate intellectual property
strategies. In addition, in this survey, we also
discussed the review of the method of estimating
the entirety/the classification of types ofbusiness/survey sheet, which are used for the“SurveyofIntellectual
Property-Related
Activities.” This review is expected to result in
the improvement of data source coverage andaccuracy of estimation and the further
improvement of the reliability of future studies.
(Sadao Nagaoka)● 48 ●

Ⅱ Analysis of Intellectual
Property-Related Activities ofJapanese Companies
1

Change in the Organization Structure ofa Business Group Due to Shift to theHolding Company System and Its
Effects on Patent Application Behavior.

Corporate reorganization with the use of aholding company has been relatively frequent inrecent years. The ban on pure holding companies
under the Antimonopoly Act was lifted in 1997,
and the equity swap system and the equity
transfer system were introduced in 1999 with therevision of the Commercial Code. The corporate
divestiture system was introduced throughrevision of the Commercial Code of 2001, and theconsolidated tax system was also introduced in
2002. These system changes concerning pureholding companies are considered to constituteone of the background factors of today’s increasein the number of holding companies.
This Chapter revealed how businessactivities/R&D
activities/intellectual
property-related activities of a business group asa whole have changed due to corporate
reorganization through a shift to the holding
company system. The main results are as statedbelow. First, it was confirmed that, through a shift
to the holding company system, most businessactivities are placed under the control of not
holding companies, which are parent companies,
but
operatingcompanies,
which
are
subsidiaries/affiliate companies. At the same time,
it was also confirmed that most R&D activities
are placed under the control of not holding
companies, which are parent companies, but
operatingcompanies,
which
are
subsidiaries/affiliate companies.
Secondly, the result of precise quantitative
analysis revealed that, through a shift to theholding company system, companies come tohave a higher tendency to file patent applications
only for high-quality inventions, such as thosewith many claims. Therefore, it was revealed thatthe intellectual property management of abusiness group as a whole has become more
efficient in the point that companies fileapplications by selecting inventions for which
they file applications based on the quality of
inventions. In addition, it was also confirmed that,through shift to the holding company system, abusiness group as a whole liquidates andconsolidates business property and thereby

enhances the ability of using technologies thatcompanies possess. Consequently, it is indicatedthat intellectual property management has
become more efficient in the point that the abilityof using technologies that companies possess isenhanced.
(Yoichiro Nishimura)2

Impact of Corporate Merger on R&D
Activities – Analysis of the PharmaceuticalIndustry as an Example –In this Chapter, we conducted empiricalanalysis of the influence of a merger in thepharmaceutical industry on R&D activities in theentire industry, which includes competitors aswell as companies concerned in the merger.
Before conducting the analysis, we prepared amarket distance variable, which is to measure
pre-existing competition with a merged company
with the use of sales data by the area of medicinal
benefits, by using Jaffe’s method of measuring
technological distance (1986, 1989). The resultsof estimation revealed that a merger in thepharmaceutical industry has a stronger effect ofincreasing R&D investment on companies thatare in fiercer competition with the companies
concerned in the merger before the merger. This
result indicates that the phenomenon of merger
has a strong influence not only on companies
concerned in the merger but also on thedecision-making for R&D investment ofcompetitors whose market is close to the marketof the companies concerned in the merger. Wherea merger is conducted, companies involved in themerger are apt to gather attention, andcompetitors’ trends are often neglected. The
results of this study are regarded as indicatingthat it is necessary, when examining the adequacyof a merger, to pay attention not only to thetrends of the companies concerned in the merger
but also to those of the entire market including
competitors. On the other hand, the results ofthis study also point out problems with earlier
studies. The past studies of merged companies
implicitly have assumed that a merger and thebusiness behavior of companies other than thecompanies concerned in the merger are
independent from each other, that is, a merger
does not affect the R&D investment ofcompetitors. The results of this Chapter indicatethat such assumption is not sufficiently fulfilled atleast in the pharmaceutical industry.
(Koichiro Onishi/Akiya Nagata)● 49 ●IIP Bulletin 2009

3

Analysis of Patent Filing Behavior andExamination Requesting Behavior

In order to make it possible to predict the
number of patent applications, the existence of asolid patent production function must be
confirmed. It is known from many earlier studies
that there is a high correlation between real R&D
expenses and the number of patent applications.
However, R&D expenses and the number ofpatent applications are not in a simple
correspondence relation, and there is a possibility
that the wider use of the multiple claim system,
the existence of innovation lag, difference ininclination to patent and innovation costs anddifference in R&D productivity constitutedestabilizing factors. Thus, as a result of
estimation of a patent production function basedon the pooling data of 101 major Japanesecompanies, a stable relationship was foundbetween the number of patent applications andreal R&D expenses. However, it was found thatclaim-weighted patent applications are difficult topredict as they are strongly affected by R&D
productivity.
In addition, we conducted analysis oncompanies’ examination requesting behavior. The
business value of a considerable number ofcompanies’ inventions does not become clear
until sufficient time passes. Therefore, therequest for examination system, which gives
applicants time to determine the business valueof inventions, has the advantage of promoting thesaving of examination costs and preventing
unnecessary obtainment of rights for inventions.
However, since the period of filing a request for
examination is limited to three years, there areinventions for which a request for examination is
filed before their business value is revealed(deadline effect). Such inventions may include
those for which applications must have typically
been withdrawn (inventions for which a request
for examination has been unnecessarily filed).
With that, we conducted verification of deadline
effect like this and estimation of the number of
inventions for which a request for examination
has been unnecessarily filed. As a result of that, avery strong deadline effect was confirmed, and it
was revealed that requests for examination had
been unnecessarily filed for 21.6% of patentapplications.
(Setsuo Yamada/Yasuyuki Ishii)

IIP Bulletin 2009

4

Substantive Examination of Patents andFirms` Patent Application Behavior

In this Chapter, we first examined the sourceof uncertainty of patent examination, and thenconfirmed whether there is a tendency that is
consistent with the result. First, it is believedthat the rate of applications for which a decisionof refusal is rendered in patent examination (rateof decision of refusal) is higher when there arelarge differences in the ability of searching
publicly-known
documents
and
in
the
determination of patentability between applicants
and the JPO. The rate is actually high in thehigh-tech fields in which such differences arelikely large. In the same way, many fields in which
the rate of cases in which a request for a trial
against an examiner’s decision of refusal is filed
is high are high-tech fields. On the other hand,fields in which a trial against an examiner’s
decision of refusal is highly likely to beestablished on the condition that a request fortrial has been filed are likely fields for which
determination of inventive step, etc. within the
JPO is steady and errors in decisions are apt to becorrected without fail. It was observed that such
likelihood tends to be high in low-tech fields.
Post-grant objection and trial for invalidation
are likely frequent in fields in which the exerciseof patent rights is relatively easy and for which
examination at the JPO is more difficult. In fact, it
was observed that the rate of cases in which arequest for a trial for invalidation is filed tends tobe low in fields in which infringement lawsuits
seem to be avoided through cross-licensing andother methods.
In this Chapter, we also analyzed thetemporal trends of the rate of decision of refusal,
the rate of cases in which a request for a trial
against an examiner’s decision of refusal was
accepted and the rate of cases in which a request
for a trial for invalidation was accepted. We
confirmed that their temporal changes have astrong correlation as a whole and by individual
technical field. We also confirmed that, from the
middle of the 1990s onward, trials have been
conducted at a higher level as the level ofinventions that are patented at the examination
stage has become higher.
In the end, we statistically analyzed theinfluence of the level and stability of patentability
in patent examination and trials on the filing ofpatent applications. As a result of that, we foundthat although the number of patent applications is
reduced if the level of inventions that are● 50 ●

patented through an examiner’s decision or a trial
is higher, an increase in the uncertainty of thelevel tends to increase the number of patentapplications.
We would like to point out that the results
above are largely preliminary and it is necessary
to take more time to deepen empirical analysis inorder to obtain more robust knowledge.
(Sadao Nagaoka/Tomoyuki Shimbo)
5

Exploratory Study on the Development
of/Application
for / Maintenanceof
Design Rights and Their Impact on
Corporate Value

This Chapter aimed at obtaining exploratory
and fact-finding results concerning Japanesecompanies’ various efforts relating to designs
with the use of extensive data on design rights.
The study consists of five parts. In Section (3),trends of creation, filing and exploitation ofdesigns were indicated by industry in line withtime from creation to filing and to exploitation.
The following three sections conducted analysis
with the intention of finding facts, focusing
attention on the creators of designs. In Section(4), the relationship between the characteristicsof the industry and products and the form ofdevelopment of designs was discussed throughanalysis of the average number of creators per
design. In the analysis in Section (5), weclassified creators into three types, i.e., in-house
designers, designers at affiliate companies andexternal designers, and discussed whether there
is a difference in choice between in-house andexternal designers between the fields of products
and between companies. In Section (6), we
measured the degree of interaction between
designers and engineers, taking up printers andcell phones on a trial basis. The conclusion that is
drawn from a series of analyses is summarized in
the following point. That is, the effect that adesign right is expected to have differs
significantly depending on the type of business,and therefore, the technical characteristics of theindustry and the field of products to which eachcompany belongs serve as important determining
factors in any of the creation, filing andpossession of designs .
This was also confirmed in regression
analysis in Section (7), in which the influence ofthe filing of applications for design rights on
corporate value was verified. Through analysis
targeting all industries, no significant relationshipwas detected between design rights andcorporate value. However, the following point was
indicated through analysis conducted by dividing
samples in consideration of relevance between
technology and design. In other words, it was
indicated that it is possible to seek purely
excellent designs by employing external
designers in industries, in which technology that
constitutes the essence of a product and design
pertaining to the product have little relevance,since the development of design is notconstrained by the development of technology. It
was also indicated that corporate value isenhanced as a result of obtaining rights fordesigns that have been created in that manner. On
the other hand, it was indicated that, even for thetypes of business for which differentiation by
design is considered important, designs createdby in-house designers who are presumed to havebetter understanding of technology enhance
corporate value for the types of business in which
designs supported by technology are required.
(Kenta Nakamura/Yoichi Matsumoto)
6

Analysis of the Patent System by the
Use Structure of Patents and Its impact
on the Profitability of R&D

It is indispensable to understand the use
structure of patents in order to analyze theinfluence of the patent system on R&D. For
example, where many patent rights are used notfor in-house exploitation but for the blocking ofother companies’ inventions, such use has astrong effect of impairing other companies’ profits
from R&D. Therefore, the influence of the patent
system on the profitability of R&D is notnecessarily positive for the industry as a whole(existence of prisoner’s dilemma). Moreover,even where a patent has been licensed to anothercompany, exclusiveness is not exerted in somecases as the license is based on a cross-license
agreement.
In this Chapter, we conducted analysis withthe aim of contributing to the understanding of
the influence of the patent system on R&D
through examination of the difference in the
profitability of R&D due to difference in the use
structure of patents. The main conclusions are as
follows.
First, the analysis revealed that the rate ofoperating profit to net sales is higher forcompanies of which the patent utilization rate ishigher. Secondly, the analysis indicates that,among companies of which the patent utilization
rate is high, companies of which the rate of● 51 ●IIP Bulletin 2009

patents that are exclusively exploited in-house ishigher acquire more profits from businesses forwhich their own inventions/technologies are
exploited. Thirdly, the analysis indicates thepossibility that a situation like “patent thicket,” inwhich the average rate of cross-licensing byindustry/the average rate of blocking patents byindustry are high and companies in the same
trade possess patents that are necessary for othercompanies’ business in a dispersed manner andcannot implement the businesses, has occurred
and the profitability of companies belonging to theindustry has been worsening.
From the above, the analysis indicates thatthe current Japanese patent system isappropriately functioning to give incentives forthe commercialization of inventions andtechnologies. Specifically, it is not possible toincrease the possibility of exclusive use of theresults of R&D unless a company uses its own
patented invention for its own business, of course,on the condition that it appropriately gives
incentives for the development of product ortechnology. In addition, even if a company uses its
patented invention for excluding other companies,
such use will not result in its own profits.
(Sadao Nagaoka/Yoichiro Nishimura)
7

Analysis of the Influence of Reform of
the Pro-Patent System on Innovation
Activities in High-Tech Industries

In this Chapter, we examined the relationshipbetween pro-patent policy and innovation, taking
up the spread of patent rights to software and thepatent term extension system for pharmaceuticalproducts. In high-tech industries, including thesoftware industry and the pharmaceuticalindustry, protection of inventions by patent rights
has the effect of enhancing incentives forinnovation. On the other hand, however,strengthening of patent rights will reduce themotivation of following companies that conduct
cumulative innovation. In order to discuss therelationship between pro-patent policy andinnovation, it is necessary to study the balance
between them. In this Chapter, we conductedanalysis focusing attention on patentees as thefirst step of the study.
First, regarding the relationship between the
spread of patent rights to software and innovation,
it was found that possession of patents is deeply
related to moving away from the subcontracting
structure that consists of made-to-order software
companies and making a shift to independent

IIP Bulletin 2009software companies. In addition, as a relationshiplike this was especially observed in companies
that started filing patent applications from thelatter half of the 1990s onwards, there is thepossibility that patent system reform relating tosoftware that started in the latter half of the
1990s has had influence. However, no
statistically-significant relationship was observed
between the package rate, which is anotherindicator of innovation, and patents possessed. It
was not possible to confirm the existence of aclear relationship between the status of filing ofpatent applications at pure software companies
and the system reform.
With regard to the patent extension systemfor pharmaceutical products, etc., we went nofurther than the confirmation of the status of useof the system. According to measurement, thesubstantive period of validity of a patent is from10 to 12 years, of which about four years is theperiod that was extended based on the system ofregistration of extension. The extension of thesubstantive period of validity of a patent by
one-thirdcansignificantly
improvetheopportunity for early-started manufacturers tomake profit. In addition, as a result of verification
concerning the extended period, it was found thatthe system reform of 2000 expanded the subject
scope by a little less than 20%. At the same time,
it was also confirmed that, in considerable cases,
the extended period reaches the ceiling at five
years. It is necessary to consider the issue
concerning the duration of a patent, specifically,
the issue of setting of a ceiling under the current
system, from more macro perspectives, including
the way of thinking for an appropriate balance
between new drugs and generic drugs.
(Kazuyuki Motohashi/Masayo Kani)
8

Economic Evaluation of the Patent
System Based on the Measurement ofPatent Premium

The contemporary patent system is expected
to play a role as an industrial policy that enhances
the value of innovation and promotes R&D
activities by granting exclusive rights forcompaniesa inventions. However, there had been
no empirical study that clearly measures how
much the granting of exclusive rights enhances
the value of innovation. Arora, Ceccagnoli and
Cohen (2008) defined a multiplier that indicates
how many times the value of innovation isenhanced owing to the granting of patent rights as
rigtent premium,” and measured it. In this● 52 ●

Chapter, efforts are made to measure patentpremium in Japan by referring to earlier studies
and utilizing the to the granting of patent rights
as rigtent premium,” and measured it. In this ty
of a patenking for an a is the possibility that thepatent system sufficiently stimulates companies’
R&D activities since the value of innovation forwhich a company has chosen to obtain a patent issignificantly enhanced though patenting is notnecessarily regarded as an advantageous means of
exclusive use for average innovation.
(Setsuo Yamada/Yasuyuki Ishii)

Ⅲ Consideration Concerning the“Survey of Intellectual
Property-Related Activities”
1

Review of a Method of Estimating theEntirety

The parent population of the Survey ofIntellectual Property-Related Activities consistsof individuals, juridical persons and publicresearch institutes, including universities, inJapan, which have filed one or more applications
for any of patent, utility model, design andtrademark in the year two years before the yearof the survey. However, answers to the survey
can actually be obtained only from some of them.
Therefore, in order to understand the intellectual
property-related activities of the entire parent
population, it is necessary to conduct an extended
estimation based on valid answers. In this study,
we considered adopting generalized regression
estimation, which uses the rank based on thenumber of applications for types of business andfor four laws as auxiliary variables, as a method ofgiving weight for estimation to companies, etc.
from which answers were collected. The
advantage of this estimation is the point that it is
not necessary to change weight according to theitem subject to estimation since one weight isgiven to each company. Then, it was indicatedthat it is possible to estimate, with high accuracy,
the number of applications by type of business forall of the four laws with the use of the weightobtained here.
(Takahiro Tsuchiya/Fumio Funaoka)
2

part

Verification of the Classification ofTypes of Business in the Survey ofIntellectual Property-Related Activities
Intellectual property-related activities form aof economic activities; therefore, theclassification of types of business in the Survey ofIntellectual Property-Related Activities should bemade responsive to the Japan Standard Industry
Classification, which systematically classifies
similar economic activities, in some form. In
doing so, it is probably possible to draw up a more
useful classification of types of business by
integrating the classification items of the Japan
Standard Industry Classification on the basis of anevaluation index that indicates the level ofintellectual property-related activities. On theother hand, we obtained results that indicate thenecessityofsegmenting
theexistingclassification of types of business for the
information and telecommunications industry. In
addition, the unit of application of the Industry
Classification is business office while the unit ofsurveyoftheSurveyofIntellectual
Property-Related Activities is company. In
classifying the types of business, the perspectiveof what industries each type of business by theunit of company diversifies into throughexpansion of business offices is also important.
Moreover, we also obtained results that indicatethat it is necessary to understand intellectual
property-related activities on a business groupbasis beyond a company basis, as intellectual
property-related activities are conducted based on
the strategic decision-making of a company as awhole.
(Fumio Funaoka/ Takahiro Tsuchiya)
3

Review of the Survey Sheet for theSurvey of Intellectual Property-Related
Activities

The “Survey of Intellectual Property-Related
Activities” is a statistical survey, which the JPO
has been conducting from fiscal 2002 with the aimof understanding the actual conditions ofintellectual property-related activities of Japanesecompanies, etc. in order to develop basic data forplanning intellectual property policies of Japan.
This statistical survey provides muchinformation that is very useful for study, which
only companies, etc. can know, including thestatus of activities of intellectual property
departments and the status of use/exploitation ofindustrial property rights. In addition, surveys
that aggregate and provide such information are
rare worldwide.
The survey marks the seventh year in fiscal
2008. By continuously conducting such statisticalsurvey, it is possible not only to understand theinterannual intellectual property trends of● 53 ●IIP Bulletin 2009

companies, etc. but also to accumulate data forverifying the effects of intellectual property
policies. The survey is thus expected to become
increasingly useful.
The survey committee consisting ofintellectuals has held repeated discussions on thesurvey items of the “Survey of Intellectual
Property-Related Activities” over the past
several years. The committee in this study also
considered ideas for improvement in order to gain
more precise understanding of the actual
conditionsofintellectual
property-related
activities in Japan as well as in order to increase
the accuracy of the survey itself by improving therate of collection through reduction of the burdenof answering.
Problems with items concerning licensing
were discussed in the review this time. In
addition, problems that have a bearing on thecentral point of the survey were also raised.
(Researcher : Tomoyuki SHINBO)

IIP Bulletin 2009

● 54 ●