12 Fiscal 2007 Survey on the Application Behavior for
Industrial Property Rights of Japanese Companies
The strengthening of management with emphasis on the creation and exploitation of
intellectual property is an important challenge for Japanese companies in increasing
competitiveness. The “Intellectual Property Strategic Program 2007,” compiled in May 2005, also
advocates that, in order to make Japan an “intellectual property-based nation” and enhance theinternational competitiveness of Japanese industries, it is important for Japanese companies tocarry out management that emphasizes the exploitation of intellectual assets, etc., which aresources of competitiveness. In light of the above, this survey report conducts eight empiricalanalyses in total with regard to the impact of M&A, which has become increasingly important inrecent years, on companies’ intellectual property-related activities, the characteristics ofintellectual property-related activities of SMEs or unlisted companies, the effect of the pro-patent
policy relating to software patents and the strategic use of design rights and trademark rights,
which have not been studied much in the past. Furthermore, regarding the “Survey of Intellectual
Property-Related Activities,” which is used for these analyses and is the only statistical survey ofintellectual property-related activities in Japan, this study report conducts the review of thequestionnaire sheet, as well as the review of the estimation method and the classification of types ofindustry.

I

Introduction

The strengthening of management withemphasis on the creation and exploitation of
intellectual property is an important challenge
for Japanese companies in increasing
competitiveness. The “Intellectual Property
Strategic Program 2007,” compiled in May 2005,
also advocates that, in order to make Japan an“intellectual property-based nation” andenhance the international competitiveness ofJapanese industries, it is important forJapanese companies to carry out managementthat emphasizes the exploitation of intellectual
assets,
etc.,
which
are
sourcesofcompetitiveness.
Under
such
circumstances,
corporate
reorganizations for enhanced competitivenesshave been rapidly increasing in Japan since thelatter half of the 1990s. In addition, althoughmost of the past analyses of companies’
intellectual property-related activities werefocused on patent rights due to data constraints
and other reasons, design rights and trademark
rights are also supposed to be important tools
for intellectual property strategies for●

IIP Bulletin 2008

companies. Moreover, clarification of therelationships between the competitiveness andintellectual property-related activities of SMEs,
which form the basis of Japanese industries, is
expected to give important suggestions for thegrowth strategies of SMEs and contribute tomaintaining and enhancing the vitality of theJapanese economy.
In light of the above, this survey reportconducts eight empirical analyses in total withregard to the impact of M&A, which has become
increasingly important in recent years, oncompanies’ intellectual property-related activities,
the characteristics of intellectual property-related
activities of SMEs or unlisted companies, theeffect of the pro-patent policy relating tosoftware patents and application and use
behaviors for design rights and trademark
rights, which have not been studied much inthe past. All of the analysis themes are on
issues whose analysis is expected to become
increasingly needed in the future. This survey
report offers the results of pioneering researchin these fields.
The results of such research are expected
to be used as a baseline for the planning of the
98 ●intellectual property policy or as a baseline forthe formulation of intellectual property
strategies by companies, etc. Moreover, thissurvey included the review of the estimation
method, classification of types of industry andquestionnaire sheet adopted for the “Survey ofIntellectual Property-Related Activities” (Japan
Patent Office). Due to such review, the coverageof the data source and the accuracy of
estimation are expected to be increased, which
will further improve the reliability of future
research.
(Sadao NAGAOKA)II

Analysis of Intellectual PropertyRelated Activities of JapaneseCompanies

1

Impact of Corporate Reorganizations on
the Application and R&D Trends: Case
Study-Based Empirical Analysis

The number of M&A deals in Japan has
been rapidly increasing in recent years. This
chapteranalyzeshowsuch
corporate
reorganizations
makechangesintheapplication and R&D trends of companies. In
particular, analysis is conducted from thefollowing perspectives with a focus onhorizontal mergers between companies in thesame trade for the purpose of expanding
market share, which have recently become
more important among M&A deals in Japan: (i)Will the number of patent applications filed by
a company increase due to such merger?; (ii)Will the opportunities for inventions, for whichapplications have been filed before merger, tobe used increase due to such merger? In thisregard, the capacity to work/exploit technology
is expected to be increased due to integration ofbusiness assets through a merger, which willcause an increase in the number of patentapplications filed after the merger and a rise in
the rate of filing requests for examination for
inventions, for which applications have been
filed before the merger. In addition, it is also
expected that the amount of R&D expenses will
be reduced due to elimination of overlapping
investment in activities that have been
separately carried forward and that the●

numberofapplications
will
decrease(application behavior will become more
efficient). Moreover, even if the amount of R&D
expenses experiences no change between before
and after merger, R&D productivity may
increase due to acquisition of know-how,
technology and knowledge.
The result of the analysis revealed that theapplication/request for examination behaviors
of a parent company and its group companies
as a whole differ in some cases before and after
corporate reorganization. This is probably
because the role that each parent company
expects its subsidiaries to play is different. As awhole, the number of applications and that ofrequests for examination filed by parent
companies tend to decrease after corporate
reorganizations. However, after eliminating theinfluences of the technology market andindustrial attributes, it was confirmed that the
number of applications and that of requests for
examination increase due to corporate
reorganization in many fields. This is probably
because R&D productivity and the capacity to
use technology are enhanced due to the effect ofintegration of business assets throughreorganization and other synergy effects. In
addition,theeffectofacorporate
reorganization largely differs depending on the
purpose thereof. In particular, the analysis
indicated that, seen at the level of business, abusiness integration for which the purpose isconsidered to be streamlining causes a decreasein the number of applications.
(Isamu YAMAUCHI and Sadao NAGAOKA)

2

Impact of M&A in the PharmaceuticalIndustry on R&D/Intellectual Property
Departments

In recent years, M&A has become
increasingly
commonamong
Japanesecompanies. Japanese drug manufacturers arealso actively carrying out M&A. However, it canhardly be said that there is sufficientknowledge about the impact of such M&A on
R&D activities or intellectual property-related
activities of companies in the entire industry,including companies concerned with M&A. This
chapter analyzes the impact of M&A between
99 ●IIP Bulletin 2008

drug manufacturers on R&D activities andintellectual property-related activities ofcompanies in an empirical manner. This
chapter is characterized by the point that it
pays attention not only to a traditional thesis,
i.e. what impact such M&A has on R&D
activities (positive or negative) but also to theimpact thereof on intellectual property-related
activities, which constitute a representative
R&D-related indirect department. If an indirect
department, which is a cost center, can be cut
down through merger, the productivity of theentire company can be increased. Does merger
contribute to increasing operating efficiency insuch a manner?
The results obtained in this chapter are as
follows. In the past research, M&A wasconsidered to have both positive and negative
impacts on the R&D activities of companies,
and both impacts were empirically confirmed.
However, the analysis in this chapter reached aconclusion that M&A in the pharmaceuticalindustry, in particular, merger of companies,
vitalizes R&D activities. This result can be said
to be indicating that merger in thepharmaceutical industry leads to the merit ofscaleorscope,
or
improvementofappropriability. On the other hand, it was
empirically revealed that merger has anegative effect on the number of persons
engaged in intellectual property-related
activities. This fact indicates that merger
contributes to increasing efficiency throughreduction of overlapping operations in theindirect department, and it can thus be said tobe showing the possibility of increased
productivity for the company as a whole.
(Koichiro ONISHI and Akiya NAGATA)

3

Impact of Intangible Assets on Corporate
Value

This chapter analyzed the relationships
between intangible assets and corporate value
in terms of manufacturing companies that arelisted on the first section of the Tokyo Stock
Exchange, with the use of financial reports andthe panel data of the “Survey of Intellectual
Property-Related Activities” for four years fromfiscal 2002 to 2005. Specifically, impact on●

IIP Bulletin 2008

Tobin’s q as a proxy variable for corporate value
wasanalyzedassuming
R&D
assets,advertising assets, personnel assets andintellectual property rights as the constituent
factors of intangible assets. The result of theanalysis showed that R&D expenses, whichwere set as a proxy variable for a company’s
technical capabilities, have a positive effect on
Tobin’s q. This supported the results of past
empirical research. However, the analysis
indicated that R&D expenses have a negative
impact on the number of applications for patentrights. This hinted at a tendency of excessive
patent acquisition among companies whichwere taken as samples. Regarding the stock ofadvertising expenses as well as design andtrademark rights, all of which were set as proxyvariables for brand, the result of the analysis
showed that all of them have a positively
significant effect on Tobin’s q. Out of them, theeffect of design rights was found to be larger
compared to that of other kinds of intellectual
property.
In addition, a tendency that foreign
applications have more positive impact on
corporate value than domestic applications wasobserved through estimation conducted by
dividing applications for intellectual property
rights based on the place of filing. Other thanthese, as a result of analysis on the mutually
alternative/complementary
relationships
among patent rights, design rights andtrademark rights, all of which are intellectual
property rights, alternative relationships weresignificantly estimated between design rights
and trademark rights, and complementary
relationships were hinted at between patentrights and trademark rights. Regarding
personnel assets, a variable, excess personnel
expenses, was created based on the difference
between the average wage of the company inquestion and the average wage of companies in
the relevant industry. This variable was foundto have a positive impact on Tobin’s q.
(Yozo AOKI and Hiroyuki ODAGIRI)

4

Quantitative Analysis of Determinant
Factors for Design Applications
This

100 ●

chapteraims

atquantitatively

clarifying determinant factors for domestic
design applications with the use of the “Surveyof Intellectual Property-Related Activities.”
Main results are as follows.
(i) The more R&D-intensive a company is, thehigher the productivity of its designs. In
addition, the designs of such companies arelikely to be copied since the products thereof
are of high quality. Therefore, such companies
actively file applications for design rights. (ii)Moreover,under
thesituation
where
patent-based
appropriability
islow,
R&D-intensive
companies
have
more
expectations of the complementary functions ofdesign rights than other companies; therefore,
they file many design applications. (iii) For
companies oriented toward differentiation fromother companies based on the novelty of designs,
it is important for maintaining theircompetitive advantage that the relevant
designs are protected by law. Therefore, suchcompanies file many applications for design
rights. (iv) Diversified companies, whichdevelop various product portfolios, are active infiling applications for design rights since they
have the risk that a decline in their reputation
due to counterfeits will extend in many
directions. (v) The longer lifecycle of a productin the market is, the longer the product is
exposed to the risk of copying. Therefore, forsuch products, companies can enjoy the effect ofprotection of rights based on registration ofdesigns over a long period of time. In addition,
it is easier to disperse fixed costs that arenecessary for filing applications. For thesereasons, it is indicated that the incentive forfiling a design application is higher for productswith a longer lifecycle.
(Kenta NAKAMURA and Hiroyuki ODAGIRI)

5

Empirical Analysis of Foreign Trademark
Applications and Trademark Licensing

This chapter conducted an analysis offoreign
applications
andlicensing(introduction), emphasizing a focus on
trademarks among intellectual property rights.
For Japanese companies suffering damages
from counterfeits in foreign countries, the way
to file trademark applications in foreign●countries is one of the important subjects ofdecision-making. In addition, it has been an
important issue whether or not a licensor oftechnology gives a license for the relevant
trademark to another company at the time
when it gives a license for the technology
thereto. The analysis in this report revealed thefollowing matters.
Firstly, the more diversified technologies acompany has and the more difficult copying thecompany’s products is, the less applications thecompany files in Asia. Conversely, thisindicates that trademarks are more importantfor companies whose products can be easily
copied.
Secondly, companies that belong to anindustrywithhigherpatent-based
appropriability in Japan file more trademark
applications in foreign countries. In addition,such tendency was seen more strongly in termsof Asia than the United States. This indicatesthat it is especially difficult to exercise patentrights in Asia and that trademarks are more
important for companies that place emphasis
on protection by patents in Japan.
Thirdly, among companies that are granted
licenses for patent rights, there was a tendency
that companies with higher absorption capacity(R&D-intensive companies) are also granted
licenses for trademarks. To put it the other way
around, this indicates that it is difficult forcompanies with low absorption capacity to use
other companies’ trademarks since they arelikely to reduce the value of a brand that they
have introduced.
Moreover, the effect of such absorption
capacity was found to be larger for high-techindustries. This indicates that absorption
capacity is not always important in introducing
a patent and a trademark together but
absorption capacity is especially important inindustries in which high technical capabilities
are required. However, the result of theanalysis of trademark rights in foreigncountries indicated that companies with higher
absorption capacity are more likely not to be
granted trademarks as they can be powerfulcompetitors.
(Tomoyuki SHIMBO and Sadao NAGAOKA)

101 ●IIP Bulletin 2008

6

Research on the Intellectual Property
Management Systems of SMEs

In
order
to
maintainindustrial
competitiveness in the future, it is importantfor Japan to enhance the competitiveness of
SMEs which form the basis of industrial
competitiveness.
Therefore, this chapter gave an overview of
the actual conditions with regard to thecharacteristics (the number of persons incharge of intellectual property, expenses forintellectual property-related activities, etc.) of
the intellectual property management systemsof Japanese SMEs, and also analyzed theirimpact on the rate of return of companies andtheir tendency in the acquisition andpossession of patents.
According to the analysis, in order toenhance competitiveness, it is important for
both SMEs and large companies to improve thequality of inventions and create anenvironment for exploiting them, or to possess
patents that are like essential patents, andthereby secure their own business fields (toincrease the rate of foreign patents possessed
and the utilization rate thereof).
On the other hand, the element that is
especially necessary for SMEs to enhance theircompetitiveness is the existence of an in-housepatent attorney. Though the rate of SMEs thathave an in-house patent attorney is very low,
the profit rates of companies with an in-housepatent attorney are significantly higher thanthose of companies without in-house patent
attorney. That is, for SMEs, creating anenvironment that enables having an in-housepatent attorney and holding in-house personnel
who can handle intellectual property-related
operations professionally to some extent
without depending on outsourcing will lead to arise in the profit rates.
In addition, with regard to creation of
intellectual property in the previous step of
exploitation of intellectual property, necessary
matters are common to SMEs and large
companies. The analysis showed the importanceof the existence of complementary assets, which
are useful in working inventions, and of
proactive efforts for R&D activities and●

IIP Bulletin 2008

activities to lead inventions to intellectual
property.
(Isamu YAMAUCHI and Koichiro ONISHI)

7

Analysis of R&D Activities of Unlisted
Companies and Their Acquisition and
Use of Patents

This chapter analyzed the characteristicsof
R&D
activities
andintellectual
property-related
activitiesofunlisted
companies, as well as whether or not thosecharacteristics can be explained based on theunique characteristics of unlisted companies,
which are demonstrated through comparison
with listed companies. The analysis in thischapter revealed the following matters.
Firstly,thestructureofunlisted
companies was revealed. Specifically, comparedto listed companies, unlisted companies more
actively carry out R&D activities (R&D
intensity) and exploit their patents in-house interms of their sizes. On the other hand, listedcompanies show a high tendency to acquire
patents even for trivial inventions.
Secondly, listed and unlisted companies
were divided into five types. Out of these five
types of companies, quantitative analysis was
conducted with regard to determining factors
for the characteristics of the R&D activities andintellectual property-related activities of three
types of companies. The analysis revealed thatthe characteristics of activities of delistedcompanies and purely unlisted companies could
be originated in their ownership structures(rate of shares held by board members in
Hypothesis 1).
Thirdly, with a focus on companies thatwere listed or delisted within the analysis
period, quantitative analysis was conductedwith regard to the impact of their listing ordelisting on R&D activities and intellectual
property-related activities. According to theresult of analysis in this report, it can hardly besaid that listing has a significant impact on
R&D
activities
andintellectual
property-related activities. On the other hand,
it is inferred from the result of the analysis thatdelisting has a significant impact on R&D
activities and intellectual property-related
102 ●activities. However, due care is required ininterpreting the result because the timing of
the explanatory variable and the timing of the
explained variable are off the restriction of theanalysis period.
This analysis is valuable as it provided a
starting point to see the outline of the entire
picture of R&D activities and intellectual
property-related
activitiesofunlisted
companies. However, it is still a preliminary
analysis. Firstly, there is an undeniable
possibility that unlisted companies taken as
samples in this analysis have originallyactively implemented R&D activities andintellectual property-related activities because,
according to “Nikkei Financial Data,” there is aconsiderable difference between the rates oflisted companies and unlisted companies thatansweredthe“SurveyofIntellectual
Property-Related Activities.” Some sort ofaction has to be taken to reduce such sample
bias. Secondly, there is a lack of information onlisted and unlisted companies, information on
the change of the listing condition, andinformation on the listing market. Therefore,
accurate analysis results can probably beobtained by conducting analysis again after
acquiring a considerable amount of suchinformation. Full-scale and rigorous analysis is
to be required in the future.
(Yoichiro NISHIMURA and Sadao NAGAOKA)

8

Analysis of the Pro-Patent System andApplication Trends in Software Patents

In terms of movements related to software
patents in Japan, software media became
patentable in 1997. Starting with this, softwarethat is provided on-line became patentable in
2000, and software came to be treated as a“product” as prescribed in the Patent Act in2002. This report analyzed, using patent data,
the impact of such institutional changes
relating to software patents on patentapplications and innovations relating tosoftware.
First of all, the characteristics of patentapplications filed by companies specialized insoftware were examined based on the “Surveyof Intellectual Property-Related Activities” and●the “Survey of Selected Service Industries.” Outof patent applications filed by such companies,
those that seem to be related to software were
found to be classified into the following five
types: those related to (i) e-commerce, (ii)information search and database, (iii) image
data processing, (4) program control and (v)information system/control within computer. In
addition, the type of patent applications filed
differs depending on the type of the software
company. The ratio of patent applications
related to information search and database ishigh for companies dealing with packaged
softwareforbusinessuse.
Moreover,information service-related companies filerelatively many patent applications related toprogram control while companies producing
software by order file relatively many patentapplications related to e-commerce.
In addition, analysis was conducted withregardtotherelationships
betweeninstitutional revisions relating to software
patents and application trends by extracting
not only software companies but also
companies
which
file
applicationsforsoftware-related
patents.
The
rate
of
software-related patents gradually increased
throughout the 1990s both in terms of thenumber of patents and the number of claims.
Then, it rapidly increased in 2000 and 2001.
Through detailed study of the result, it was
found out that the rapid increases in 2000 and2001 were owing to companies which newly
entered the field of software patents (the time
when a company acquires such a patent for the
first time is considered to be the time of entry).
Moreover, according to the result of regression
analysis, the tendency to file applications forsoftware patents has been increasing since thelatter half of the 1990s, particularly, in terms ofthe total number of claims, and theinstitutional revisions relating to software
patents have had some sort of impact on
software innovation.
(Kazuyuki MOTOHASHI)

103 ●IIP Bulletin 2008

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

Regarding the Review of the Method ofExtended Estimation

Some problems have been pointed out withregard to the current estimation method. The
first problem is a large discrepancy between thepredicted and estimated number of applications
to be filed in the future and the number ofapplications actually filed. The second problem
is difference in the stratification standards forthe number of applications depending on theitem subject to estimation. The third problem isdifficulty in recurrence due to complexity of themethod of filling missing data. With the aim of
overcoming these problems, estimations wereconducted on trial by two methods, specifically,
linear estimation and generalized regression
estimation, with the use of data that wasavailable at the time of the survey. In addition,
the analysis of the results provided suggestions
with regard to the direction for the
improvement of the estimation method and thedata necessary therefor.
Although the linear estimation attemptedin this survey is a very simple method, from theperspective of prediction, better results wereobtained with regard to the number of patentapplications and that of design applications,compared to the current estimation method. In
terms of the number of utility model
applications and that of trademark applications,estimate values obtained by linear estimation
were remarkably inferior to those obtained by
the current method. This is considered to bemainly attributable to the stratification
standards.
Regarding the results of generalized
regression estimation, estimate values for thenumber of utility model applications and that oftrademark applications were considerably
better compared to those obtained by linear
estimation.
Therefore,
thisgeneralized
regression estimation is likely to be used forextended estimation in the future.
Possible directions of future research
include more detailed consideration of themethod of filing missing data and the●

IIP Bulletin 2008

stratification standards, as well as the analysis
of discrepancy between estimate value andactual value with respect to each class. In doing
so, accuracy of estimation can be further
increased by using data such as the number ofapplications by the class of the number ofapplications under each of four intellectual
property laws and the frequency of filing, as
well as the number of applications by the classof capital in the population.
(Takahiro TSUCHIYA and Fumio FUNAOKA)

2

Classification of Types of Industry in theSurvey of Intellectual Property-Related
Activities

The 12th revision of the Japan Standard
Industry Classification was conducted in
November 2007. In the 12th revision, theclassification was reviewed in full scale,including establishment of new large items ofclassification, so as to correspond to changes in
the industrial structure after the 11th revision,
such as the sophistication of information andtelecommunications. In response to this, there
is a call for changes to the classification of typesof industry in the Survey of Intellectual
Property-Related Activities.
This is because it is necessary to enableconducting analysis that reflects the current
industrial structure more accurately and to
Industry Classification.
Statistical classification is a standard forextracting valid information from statistical
data. Use of a common statistical classification
for statistics contributes to promoting
systematic development of statistics andincreasing convenience.
Rigorous consideration based on data isbasically necessary with regard to the validityof applying the Japanese Standard Industry
Classification to the classification of types ofindustry in the Survey of Intellectual
Property-Related Activities. However, in thischapter, proposed new classification of types ofindustry was formulated due to data
constraints, placing emphasis on the continuity
with the past results and consistency with the“Survey of Research and Development”
conducted by the Ministry of Internal Affairs

104 ●and Communications with regard to R&D
activities, in the same way as the Survey ofIntellectual Property-Related Activities.
The Survey of Research and Development
is a survey focused on R&D inputs while theSurveyofIntellectual
Property-Related
Activities is a survey emphasizing R&D
outputs. Therefore, much useful information
can be obtained by using the results of thesesurveys together.
It is a future challenge to analyze whatstandards should be set for the classification of
intellectual property-related activities from theviewpoint of homogeneity and to what extent
the classification of types of industry based on
the standards is valid, by using information on
intellectual property-related activities andinformation on industry classification together.
(Fumio FUNAOKA and Takahiro TSUCHIYA)

3

Regardingthe
Review
Questionnaire Sheet

of

the

The “Survey of Intellectual Property-Related
Activities ” is a statistical survey which theJapan Patent Office conducts with the aim ofcontributing to strengthening the intellectual
property management activities of companies,
etc. by gaining a quantitative understanding ofintellectual property-related activities ofcompanies, planning and verifying theintellectual property policy of Japan andproviding relevant information to industrial
circles.
The “Survey of Intellectual Property-Related
Activities” provides a considerable amount of
information that is useful in analyzing andunderstanding the intellectual property-related
activities of companies, etc., including
information on the license revenues ofcompanies and the status of exploitation ofindustrial property rights by companies.
Although the fiscal 2008 survey marks theseventh time, the survey has been continuously
reviewed in the past for further increase in its
utility.
This survey committee also discussed the
problems of the questionnaire sheet andnecessary improvements thereto in order togain a more accurate understanding of the●actual conditions of intellectual property-related
activities in Japan and to reduce the burden ofanswering questions.
In doing so, the committee conducted areview mainly on the items for which many
respondents made inquiry. In particular, thecommittee made it possible to check the logic byclarifying definitions, adding and correcting
notes and changing layout. In addition, thecommittee considered possible improvements to
reduce errors in answering and the burden ofanswering questions.
Moreover, in the review of this time, thecommittee also considered the introduction of aquestion asking the number of persons engaged
in standardization activities as well as
measures for the case where a company subject
to the survey cannot independently answer aquestion. Through introduction of such aquestion, it will become possible to understandthe actual conditions of standardization
activities, which have recently become
increasingly important. In addition, by taking
such measures, accurate values can be obtainedeven where a holding company or parent
company manages intellectual property rights
in a lump amid the progress of corporate
reorganization, and the response rate can also
be increased.
(Researcher: Isamu YAMAUCHI)105 ●IIP Bulletin 2008