9 Patent Thickets and Refusals to License in the Life Sciences in Japan- Legal Remedies at the Interface between
Patent and Competition Law(*)
Invited Researcher: Esther van Zimmeren(**)

Concerns have been expressed on the growing number of patents in the life sciences. High numbers ofpatents 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 thebiomedical industry. Is there indeed a patent thicket in the biomedical field in Japan? And are there cases ofrefusals 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, suchas 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, inparticular from the so-called “open innovation”-paradigm.

Ⅰ Introduction
Japan aims at becoming a ‘true’ “intellectual
property based nation”. (*1) In this respect, theJapanese government has introduced many new
legislative changes and launched various policies
aimed at industry, universities and research
institutes. For the scope of this report it isparticularly interesting that the life sciences havebeen identified as one of the priority areas inJapan’s Science and Technology (S&T) Basic Plan
issued in 2006 (hereinafter 3rd S&T basic Plan).(*2)
It is widely known that patents are critical forthe life sciences sector. Only in thepharmaceutical industry managers do rate patents
as more effective than other means of profitingfrom innovation. It is estimated that over one half
(*)
(**)
(*1)
(*2)
(*3)
(*4)

of the worldwide value of patents accrues a small
number of large pharmaceutical companies. (*3)
Patents have played this role supporting different
innovation models. (*4) For long, most companies
adopted a form of “closed innovation”
characterized by focusing on internal ideas,internal research and development (R&D) andcontrol of intellectual property (IP) (especiallypatents). This approach favored verticallyintegrated companies generating their own ideas,
developing them, building them, marketing them,
distributing them, servicing them, financing them,and supporting them on their own. However,
nowadays the distribution of knowledge has
spilled beyond the knowledge held by big firms’
central research laboratories, leading to pools ofknowledge shared by companies, customers,

This is a summary of the report published under the Industrial Property Research Promotion Project FY2008
entrusted by the Japan Patent Office.
Research Fellow FWO, Center for Intellectual Property Rights,University of Leuven, Belgium.
See for instance Intellectual Property Policy Headquarters (2003), Strategic Program for the Creation,
Protection and Exploitation of Intellectual Property, July 8, 2003, English Translation, available at
http://www.kantei.go.jp/foreign/policy/titeki/kettei/030708f_e.html.
Government of Japan (2006), Science and Technology Basic Plan, English Translation, available at
http://www8.cao.go.jp/cstp/english/basic/3rd-BasicPlan_06-10.pdf. For more information, see below Section II.
Bessen, J., & Meurer, M.J. (2008), Patent Failure , Princeton University Press, at pp. 106-109.
All the information in this paper on innovation models and the shift from “closed innovation” to “open innovation”
has been derived from the work of H. Chesbrough. See Chesbrough, H., Vanhaverbeke, W., & West, J. (eds.) (2008),
Open Innovation: Researching a New Paradigm, Oxford-New York, Oxford University Press; Chesbrough, H.
(2006a), Open Business Models: How to Thrive in the New Innovation Landscape , Boston, Massachusetts,
Harvard Business School Press; Chesbrough, H. (2003), Open Innovation – The New Imperative for Creating andProfiting from Technology, Boston, Massachusetts, Harvard Business School Press.
● 62 ●IIP Bulletin 2009

suppliers, universities, research institutes,
consortia, and start-ups.
Globally, more and more companies aregradually developing towards an “open innovation
model” using external ideas as well as internal
ideas, and internal and external paths to market,
in order to advance their technology. Thisdifferent innovation model requires new businessmodels and a different approach towards
intellectual property as well. Therefore, it isessential to analyze to what extent the life
sciences have responded to this changed
innovation paradigm and how this has developedin Japan. Such an open way of pursuing R&D will
create new opportunities and challenges.
Increasedindustrycollaborations,
university-industry collaborations, clusters andconsortia may result in advances in R&D which
could be protected by applying for patents. It
would be desirable to complement the open way
of carrying out R&D with an “open attitude”
regarding patents and collaborative licensing
models.
Many experts express concerns on thegrowing number of patent applications/granted
patents in the life sciences, which might cause
patent thickets. A patent thicket is a situation
where organizations encounter many overlapping
patents held by many patent owners in the area
where they are doing research, are developing
products or carrying out services. Patent thickets
generally develop in fields with complex products,
production or research processes or in areas
where many organizations compete in R&D in thesame area, resulting in fragmented patent
ownership. (*5) Next to the risk of patent thickets
patents as such also permit their owners to refuse
to grant a license. Though legitimate and inherent
in the purpose and key function of patents, insome cases patent thickets and refusals to license
might create a paradox and ultimately block R&D
and commercialization of essential products.
These two phenomena are not unique for thelife sciences but also occur in other technology
fields. Both industry and governments haveconsidered a wide variety of mechanisms toremedy situations of fragmented patent rights andovercome concerns for refusals to license byencouraging collaboration amongst different

stakeholders in order to stimulate innovation,
foster R&D and promote access and diffusion oftechnology and information. These discussions
focus especially on the use of research
exemptions, licensing guidelines, different
voluntary collaborative licensing models (patentpools, clearinghouses), and compulsory licenses.
When examining these remedies it is important toconsider the balance of interests of all actors
involved: the interests of the patent owners
wanting to recover their investments in R&D, theinterests of the technology users who would liketo offer their products and services at a fair price,and the public interest related to access to
medicines and health care services, high quality
and reasonable prices. The fact that public healthmight be put at a disadvantage might lead to adifferent balance of interests and different
outcomes of the legal analysis in the life sciences
sector compared to other sectors.

Ⅱ Legal Framework
Open innovation requires active involvement
and knowledge spill-over between companies,
customers, suppliers, universities, research
institutes, consortia and start-ups. Intellectual
property rights are very important to enable thisprocess. However, legal structures should allow
for such flows and facilitate the commercializationof university inventions and transfer ofknowledge. The Japanese government recognized
there was a gap in the Japanese legal framework
which might block effective knowledge transferfrom universities to industry essential for Japan’s
future competitive position in the world. Thus,
over the years several important legislativechanges were made and different policy
documents issued to stimulate public-private
collaboration. First, some legislation was
introduced focusing on the role of universities inthis process. The most relevant acts in this regard
are: the “Act for Promoting University-Industry
Technology Transfer”, (*6) the “National University
Corporation Act”, (*7) and the “Act on Special
Measures for Industrial Revitalization” (*8). Second,
there were some more general measures whichshow the importance the Japanese government
attaches to intellectual property rights, such as the(*5) Nagaoka, S., & Nishimura, Y. (2006), An Empirical Assessment of the effects of patent thickets , SPRU 40th
Anniversary Conference - The Future of Science, Technology and Innovation Policy, September 11-13, 2006,
University of Sussex, SPRU-Science & Technology Policy Research (on file with the author), at p. 2.
(*6) Government of Japan (1998), Act for Promoting University-Industry Technology Transfer, Law No. 53 of 1998.
(*7) Unfortunately there is no official English translation available of this act.
(*8) Government of Japan (1999), Act on Special Measures for Industrial Revitalization, Law No. 16 of 1999.
● 63 ●IIP Bulletin 2009

“Science and Technology (S&T) Basic Law”,(*9) the“Basic Law on Intellectual Property”,(*10) the“Strategic Program for the Creation, Protection and
Exploitation of Intellectual Property”, (*11) and along-term strategic policy called “Innovation 25”. (*12)
In the report, also the main provisions of theJapanese Patent Act (PA) relevant for the current
examination are described and an overview of thecurrent worldwide debate on gene patents isgiven, explaining that in Japan this does not seemto be the biggest cause of concern, rather thanresearch tools. In Japan the Act on Prohibition ofPrivate Monopolization and Maintenance of Fair
Trade, commonly called the Anti-Monopoly Act(hereinafter ‘AMA’) (*13) is the primary source oflegislation regarding competition law and isenforced by the Japanese Fair Trade Commission(JFTC).
The
AMA
prohibits
privatemonopolization, undue restraints of trade, andunfair business practices, and aims at preventing
excessive concentration of economic power.
The definition of private monopolization andundue restraints of trade refer to the “public
interest” as a criterion to evaluate the legitimacy
of a certain activity. There is however discussion
as to how this term should be interpreted and it is
not clear to what extent it might play a role in the
JFTC assessment of licensing arrangements inthe life sciences.
In order to clarify JFTC’s position on theinterface between patent and competition law, it
has published different sets of guidelines related
to the use of intellectual property rights. (*14) An
overview of the main principles of the 2007
Guidelines and the 2005 Patent Pool Guidelines isprovided.

Ⅲ Open Innovation
Open innovation(*15) is celebrated as the newparadigm for fostering innovation. More and moreorganizations move from closed innovation to
open innovation or innovation networks. Openinnovation has been defined as “…the use of

purposive inflows and outflows of knowledge toaccelerate internal innovation, and expand themarkets for external use of innovation,
respectively. Open Innovation is a paradigm thatassumes that firms can and should use external
ideas as well as internal ideas, and internal andexternal paths to market, as they look to advancetheir technology.”(*16)

In Japan in particular in the pharmaceuticalsector large Japanese companies are engaging
more and more actively in external R&D
collaboration and licensing. Even though thischange in attitude has been relatively slow inJapan, Japanese pharmaceutical companies can nolonger lag behind in the light of globalization andtheimportanceofinnovation
inthepharmaceutical sector. (*17) However, it appears
that the purpose of the collaborations withJapanese universities and public research
institutes is primarily to obtain leading edge
scientific knowledge, whereas licenses and joint
research is generally conducted with overseas
biotechnology companies.

Ⅳ Patent Thickets and Refusals to
License in Japan?
The increased number of patents/patentapplications in the life sciences has raised
concerns about the eventual emergence of patent(*9) Government of Japan (1995), Science and Technology Basic Law, Law No. 130 of 1995, English Translation, available
at http://www8.cao.go.jp/cstp/english/law/Law-1995.pdf.
(*10) Government of Japan (2002), Basic Law on Intellectual Property, Law No.122 of 2002, English Translation,
available at http://www.kantei.go.jp/foreign/policy/titeki/hourei/021204kihon_e.pdf.
(*11) Intellectual Property Policy Headquarters (2003).
(*12) Government of Japan (2007), Long-term Strategic Guidelines “Innovation 25”, June 1, 2007, available at
http://www.kantei.go.jp/foreign/innovation/innovation_final.pdf.
(*13) Government of Japan (1947), Act on Prohibition of Private Monopolization and Maintenance of Fair Trade,
ActNo. 54 of 14 April 1947, Latest revision by Act No. 35 of 2005, English Translation, available at
http://www.jftc.go.jp/e-page/legislation/ama/amended_ama.pdf.
(*14) JFTC (1968), International technology Transfer Agreement Guidelines; JFTC (1989), Guidelines for Patent andKnow-How Licensing Agreements; JFTC (1999), Guidelines for Patent and Know-how Licensing Agreements
under the Antimonopoly Act, English Translation, available at
http://www.jftc.go.jp/e-page/legislation/ama/patentandknow-how.pdf.
(*15) Chesbrough et al. (2008), Chesbrough (2006a), and Chesbrough (2003).
(*16) Chesbrough et al. (2008), at p. 1.
(*17) RIETI (2004), Report on External R&D Collaboration Survey, Tokyo, RIETI (in Japanese) and cited by Motohashi, K.
(2005), The Changing Autarky Pharmaceutical R&D Process: Causes and Consequences of Growing R&D Collaborationin Japanese Firms, at p. 2, available at http://www.mo.t.u-tokyo.ac.jp/seika/files/bio-paper%20(1).pdf.
and Akimoto, H. (2008), The Future of Research and Development – Focus on the Life Science Industry, RIETI Policy
Symposium, January 11 2008, http://www.rieti.go.jp/en/events/08011101/pdf/6-1_E_Akimoto.pdf.
● 64 ●IIP Bulletin 2009

thickets and refusals to license or unreasonable
licensing conditions, especially in the area ofgenetics. If there are many patents in the hands ofdifferent owners this may ultimately lead todifficulties in bargaining licenses to the patented
inventions successfully (patent thicket). (*18)
Every licensor will require the payment ofroyalties or upfront license fees, which ultimately
may lead to royalty stacking. Patent thickets ingenetics may disrupt further innovation, because
in genetics substitutes for genetic inventions(such as patented genes) are often lacking andcompetitors will therefore often not be able toinvent around those patents. Heller andEisenberg suggested that this increase in patents
may result in a “tragedy of the anticommons” inbiomedical research. The high transaction costs
and the stacking of royalties may stand in the wayof an agreement. This may lead to “underuse” ofthe patents concerned. (*19)
There is an increase in patenting andlicensing in the life sciences in Japan. There areconcerns about the anti-commons problem
resulting from gene patents, but especially withregard to patents on research tools. These fears
concern primarily technology which had to belicensed in from the US. (*20) In an economic study
coordinated by IIP on the Tragedy of the
Anticommons in Japan(*21) there is no firm
conclusion to what extent there is a situation oftragedy of the anticommons in Japan. However,Sumikura observes a trend among Japanese life
science researchers of anxiety and discomfort inusing research tools, which might also have a
blocking effect. (*22)
Empirical evidence in Japan shows that

overall licensing negotiations seem to run quite
well. In contrast, in the pharmaceutical sector andvis-à-vis SMEs in about 20% of the cases licenses
are refused. On top of this, in 40% of the cases
SMEs cannot reach an agreement due to highlicensing fees. (*23) Abandoning R&D projects due
to refusals to license is, however, rare. In mostcases, these situations are avoided by – in the end– paying high licensing fees. Nowadays Japanesepharmaceutical companies are becoming more
active in licensing-in patents from overseas
business ventures. Refusals to license are morecommon in cases where the patent owners areoverseas start-up businesses, mostly US
companies. (*24)

Ⅴ Legal Remedies for Patent
Thickets in Japan
In this chapter the Japanese research
exemption and some recent developments in thisregard are described. There is no case-law
available in Japan clarifying the scope of thisexemption, but according to the literature it does
not cover research tools. In this light various
Japanese experts have proposed alternative
solutions.
Also the use of licensing guidelines could
serve as a way to steer away universities andcompanies from exclusive exploitation of patents.
In this light the Council for Science andTechnology Policy (CSTP) has introduced two
sets of guidelines. (*25) There is however need formore commitment to these guidelines, which
could also be enforced by funding agencies
granting research funds on the condition of(*18)Shapiro, C. (2001), ‘Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting’, in Jaffe, A.,
Lerner, J., Stern, S. (eds.), Innovation Policy and the Economy, Cambridge, MIT Press, 2001, Vol. I, 119-150, available
at http://haas.berkeley.edu/~shapiro/thicket.pdf.
(*19) Heller, M.A (1998), ‘The Tragedy of the Anticommons: Property in the Transition from Marx to Markets’, Harvard Law
Review, 111, 621-688 and Heller, M. A., & Eisenberg, R. (1998), ‘Can Patents Deter Innovation? The Anticommons in
Biomedical Research’, Science, 280, 698-701, available at http://www.sciencemag.org/cgi/reprint/280/5364/698.pdf.
(*20) Motohashi, K. (2003), Japan’s Patent System and Business Innovation: Reassessing Pro-patent Policies , RIETI
Discussion Paper Series 03-E-020, at p. 26, available at http://www.rieti.go.jp/jp/publications/dp/03e020.pdf.
(*21) Nagaoka et al. (2005), Analysis of Various Issues Concerning the “Tragedy of the Anticommons”, Tokyo, IIP (inJapanese), English Summary, IIP Bulletin 2006, Study No. 6, 44-49, available at
http://www.iip.or.jp/e/summary/pdf/detail2005/e17_06.pdf, at p. 44 (‘2005 Tragedy of the Anticommons study’).
(*22) Sumikura (2007), ‘A Consortium for Enhanced Access to Patented Research Tools: Japanese Policy and Proposal of a Novel
Scheme’, PICMET 2007 Proceedings, 5-9 August, Portland, at p. 697-698 and Sumikura, K. (2006), Intellectual Property
Rights Policy for Gene-Related Inventions – Toward Optimum Balance Between Public and Private Ownership, Conference
paper for “The Role of Intellectual property Rights in Biotechnology Innovation”, 2006, at pp. 6-7.
(*23) Motohashi (2003), at pp. 16-17.
(*24)Motohashi (2003), at pp. 27 and 29 and Personal communication Mr. Morioka, Director of the R&D Division of JBIC,
December 4, 2008.
(*25) CSTP (2007), Guidelines for Facilitating the Use of Research Tool Patents in the Life Sciences, English Translation,
available at http://www8.cao.go.jp/cstp/siryo/haihu64/siryo1-2-e.pdf and CSTP (2006), Guidelines for Research Licenses
for Intellectual property Rights Stemming From Government-Funded Research and Development at Universities, etc.,
English Translation, available at http://www8.cao.go.jp/cstp/siryo/haihu55/siryo3-2-e.pdf.
● 65 ●IIP Bulletin 2009

serious commitment to the guidelines.
Furthermore,different
nationalandinternational advisory organs(*26) and experts(*27)
have suggested that collaborative licensing
models could be used in order to solve theproblem of patent thickets in the life sciences.
Examples of such collaborative models are patentpools and clearinghouses. However, none of theseauthorities precisely defined what type of pool orclearinghouse would be optimal in the life
sciences and how it should function in practice. Inview of the variety of existing models and thebroad interpretation of the clearinghouse concept,
it is important to be more precise and to define
different types of patent pools(*28) andclearinghouses(*29), the desirable functions, theinstitutional framework and the features.
A patent pool has been commonly defined as
an agreement between two or more patent
owners to license one or more of their patents toone another and as a package to third parties who
are willing to pay the royalties associated, either
directly by patent owners to licensees or,indirectly, through a new entity specifically set up
for the pool administration. Patent pools thus
allow interested parties to gain access to all
patents to work an invention with one single
license, a so-called “one-stop-license”, rather
than obtaining licenses from each patent ownerindividually. The analysis of the patent pools in
the report includes an overview of the benefits
and risks and an examination of the question what
could be the reason that patent pools are common
in other technology sectors (consumer electronics,
telecommunications and semiconductors), but
companies in the area of biotechnology andpharmaceuticals seem to be rather reluctant to use
this licensing instrument. A number of brief casestudies of the Pachinko-pool, (*30) the MPEG2-pool,the 3G-platform, the ULDAGE-pool and the
SARS-pool complement this analysis.
The term clearinghouse is interpreted in avery broad way and is used in relation to almost
any mechanism whereby providers and users ofgoods, services and information are matched. (*31)
Five types of clearinghouses can be distinguished:(*26) Australian Law Reform Commission (2004), Gene Patenting and Human Health, Sydney, Australian Law Reform
Commission, Discussion Paper No. 68, 2004, available at http://www.alrc.gov.au, Human Genome Organisation(2003), Statement on the Scope of Gene Patents, Research Exemption and Licensing of Patented Gene Sequencesfor Diagnostics, available athttp://www.hugo-international.org/img/ip_gene_2003.pdf ; Nuffield Council on
Bioethics (2002), The Ethics of Patenting DNA, London, Nuffield Council on Bioethics, Discussion Paper No.
932002, 2002, available at http://www.nuffieldbioethics.org OECD (2006), Guidelines for the Licensing of Genetic
Inventions, Paris: OECD, para. 41, available at http://www.oecd.org/dataoecd/39/38/36198812.pdf.
(*27) Gold, E.R., ‘Biotechnology patents: strategies for meeting economic and ethical concerns’, Nature Genetics, 30, 359,
Graff, G.D., Cullen, S.E., Bradford, K.J., Zilberman, D., Bennett, A.B. (2003), ‘The Public-Private Structure ofIntellectual Property Ownership in Agricultural Biotechnology’, Nature Biotechnology, 21, 989-995, at 994-995; Graff,
G.D., Zilberman, D. (2001), ‘Towards an Intellectual Property Clearinghouse for Ag-Biotechnology. An Issues Paper’,
IP Strategy Today, 3, 1-38, at 10-14; Krattiger, A.F. (2004), ‘Financing the Bioindustry and Facilitating Biotechnology
Transfer’, IP Strategy Today, 8, 1-45, at 19-23, Nicol, D. (2008), ‘Navigating the molecular diagnostic patent
landscape’, Expert Opinion on Therapeutic Patents, 18, 461-472 and Van Overwalle, G., van Zimmeren, E., Verbeure,B., Matthijs, G. (2006), ‘Models for facilitating access to patents on genetic inventions’, Nature Reviews Genetics, 7,
143-148, at 145-147.
(*28) For a more complete analysis of the features of patent pools, see for instance Verbeure, B. (in press), ‘Patent Pooling for
Gene-based Diagnostic Testing: Conceptual Framework’, in Van Overwalle, G. (ed.), Gene Patents and Collaborative
Licensing Models: Patent Pools, Clearing Houses, Open Source Models and Liability Regimes, Series: Cambridge
Intellectual Property and Information Law (No. 10), Cambridge: Cambridge University Press and the references citedthere.
(*29) For a more complete analysis of the features of clearinghouses, see van Zimmeren, E. (in press), ‘Clearinghouse
Mechanisms in Genetic Diagnostics: Conceptual Framework’, in Van Overwalle, G. (ed.), Gene Patents andCollaborative Licensing Models: Patent Pools, Clearing Houses, Open Source Models and Liability Regimes,
Series: Cambridge Intellectual Property and Information Law (No. 10), Cambridge University Press and vanZimmeren, E., Verbeure, B., Matthijs, G., & Van Overwalle, G. (2006), ‘A clearing house for diagnostic testing: thesolution to ensure access to and use of patented genetic inventions’, WHO Bulletin, 84, 352-359.
(*30) JFTC (1997), Recommendation decision handed down to ten companies including Sankyo Co., Ltd. in accordance with
Article 3 AMA., English Translation provided by IIP. Parallel to the Pachinko-pool there was a so-called“Pachislo-pool”. In a procedure before the Tokyo District Court the plaintiff argued that this pool was comparable to
the Pachinko-pool and violated the AMA. The Tokyo District Court held that the Pachislo-pool does not havenon-competition provisions and did not prevent new entry to the market. This view was later confirmed by the Tokyo
High Court. See: Tokyo District Court, Aruze Corporation vs. Sammy Corporation and Japan Electric Game Machine
Patent Co. Ltd., Case No. 2000 (WA) 3563, March 12, 2002, English Translation provided by IIP and Tokyo High Court,
Aruze Corporation vs. Sammy Inc. and Japan Electric Game Machine Patent Co. Ltd., Case No. 2002 (ne) 4085,
English Translation provided by IIP.
(*31) Krattiger (2004), at p. 20.
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information clearinghouses, technology transfer
clearinghouses, open access clearinghouses,
standard licenses clearinghouses, and royalty
collection clearinghouses. For all these types
examples are sought in the life sciences in Japan.
Again brief case studies are included of the
National Center for Industrial Property
Information and Training (INPIT), (*32) J-STORE,(*33)
the Single Nucleotide Polymorphisms (SNP)
Consortium, (*34) Science Commons, (*35) the
proposal for a consortium for research tools, (*36)
the Japan Biological Informatics Consortium(JBIC), (*37) and the Japanese Society for Rights of
Authors, Composers and Publishers (JASRAC)(*38).
For a clearinghouse to become effective, the main
requirement is that it is collects a critical mass ofvaluable(*39) technologies available for licensing out.
It should market this technology efficiently andpromote fair, reasonable and non-discriminatory
licensing practices. Moreover, it is important tocontinuously grow the technology base.
Animportantdifference
betweenclearinghouses and patent pools is that in case ofa clearinghouse there is no need for agreements
between the patent owners. From a competition
law perspective this substantially weakens therisk of collusion and price fixing by competitors.
Patent pools and clearinghouses are often
presented as a remedy for patent thicket
problems in electronics, telecommunications,semiconductors and potentially also the life
sciences, but they may also play a pro-active
instrumental role in the light of open innovation
initiatives.

Ⅵ Legal Remedies for Refusals to
License in JapanThe analysis on refusals to license starts withreiterating the examination regarding the research
exemption and licensing guidelines in the previous
chapter and explaining their limited role withregard to refusals to license. However, there aresome ways how this could be improved. Also
patent pools and clearinghouses are not of muchuse to remedy the refusal to license problem, asthese are largely voluntary mechanisms.
The Japanese PA allows for “arbitrary awards
granting non-exclusive licenses” to third parties
without the authorization of the patent owner.
Such awards have effects comparable tocompulsory licenses more common in othercountries. These awards were one of the key
issues discussed in the Structural Impediments
Initiative (SII), a series of bilateral talks between
the U.S. and Japan from 1989-1994 during which
the US. government asked Japan to commit tostrengthening its patent protection and stop using
the compulsory licensing clause. Since then, inJapan the arbitrary award clauses have neverbeen used even though apparently there havebeen requests for such an award.
There are three types of awards granting
non-exclusive
licenses:awardsgranting
non-exclusive licenses for non-working (Article
83), awards granting non-exclusive licenses for
dependent inventions (Article 92) and awards
granting non-exclusive licenses for the public
interest (Article 93). For the scope of this report,
especially the latter is relevant. The Industrial
Property Council defined in its implementing
guidelines(*40) that cases where the working of the(*32) http://www.inpit.go.jp/english/index.html(*33) http://jstore.jst.go.jp/EN/(*34) For more information, see http://snp.cshl.org and Holden, A.L. (2002), ‘The SNP Consortium: Summary of a
Private Consortium Effort to Develop an Applied Map of the Human Genome’, BioTechniques, 32, S22-S26.
(*35) For more information, see http://sciencecommons.org/projects/licensing/.
(*36) Sumikura (2007); Sumikura (2006) and Morioka, H. (2006), ‘Concerning the consideration-free license for patented
research tools or the possibility of a patent pool’, IIP Forum (Japan), 64, 32-41 (in Japanese), English working
machine translation provided by IIP.
(*37) http://www.jbic.or.jp/bio/english/(*38) See http://www.jasrac.or.jp/, personal communication Mr. Imamura, Meiji University, December 16, 2008, andpersonal communication JASRAC, December 17, 2008. For more information on the legal framework, see the Law
on Management Business of Copyright and Neighboring Rights (Government of Japan (2000), Law No. 131 ofNovember 29, 2000, lastly amended by Law No. 154 of December 3, 2004), the Law on Intermediary Businessconcerning Copyrights (Government of Japan (1939), Law No. 67 of April 5, 1939, lastly amended by Law No. 160
of November 22, 1999 and repealed) and the Articles of Association of JASRAC, April 1, 2008.
(*39) There is always a risk that patent owners will only entrust their “lemons” to the clearinghouse, see Akerlof, G.
(1970), ‘The Market for Lemons: Qualitative Uncertainty and the Market Mechanism’, Quarterly Journal of
Economics, 84, 488-500.
(*40) Ministry of Economy, Trade and Industry, Industrial Property Council (1997), Implementing Guidelines of the
System of Awarding Non-exclusive Licenses (Saitei Seido no Unyo youryo), established on December 1, 1975 andlastly revised on April 24, 1997, provisional translation prepared by IIP.
● 67 ●IIP Bulletin 2009

patented technology is “particularly necessary forthe public interest” could be cases where working
is particularly needed in areas relating directly tothe lives of citizens, such as public health.
However, we should not forget that Article 93
contains the wording “particularly necessary forthe public interest”. This terminology is used
explicitly in order to limit the applicability of thisprovision in accordance with the agreements
within the SII. In the implementing guidelines
also the procedure for the award of non-exclusive
licenses is described. Even though the procedure
is called ‘arbitration’, the described proceduredoes not appear to be a ‘true’ arbitration
procedure, which could be improved by including
the Japan Intellectual Property Arbitration Center(JIPAC) in the procedure.
The SII does leave more leeway forcompulsory licenses granted in case ofanti-competitive practices, that is, based oncompetition law. In Japan a mere refusal tolicense IP rights is generally considered as “theexercise of rights” (Article 21 AMA) fallingoutside the scope of the AMA, unless thecompany would have employed inappropriate
measures and the behavior would amount to
private monopolization or unfair trade practices.
In principle it is however possible that the JFTC
would conclude that an IP owner who unilaterally
refuses to provide a license to another firm whichconsequently faces difficulties in doing businessbecause of the essential nature of the IP, would
violate the provisions on private monopolizationor an unfair trade practice, that is a refusal to deal.
This is also briefly explained in the 2007
Guidelines of the JFTC.
Until now there is no case-law holding a
genuine unilateral refusal to license as being
against the AMA. Nonetheless, in 2005 the JFTC
started an investigation against Sony MusicEntertainment (Japan) Inc. and 4 other companies(Avex Network Inc., Toshiba EMI Ltd., Universal
Music K.K., and Victor Entertainment, Inc.) who
according to the JFTC violated Section 19 AMA
and Item 1 (1) of the Designation of Unfair Trade
Practices as they colluded by refusing licenses tooperators who would not entrust the Chaku-Uta
service to Label Mobile Inc. They did not have an
objective justification for this refusal. Even
though, this case is an example of a collateralrefusal to license and the outcome of the case isstill uncertain, the final decision may give somemore indications as to how refusals to license areassessed by the JFTC.
Thus, for now it is uncertain to what extent

the AMA would be able to prevent companies in
the pharmaceutical and biotechnology industry
from refusing to license their patents, even when
the underlying technology could be classified as
an “essential facility” needed in order to allow forfurther innovation and competition on asecondary market. The JFTC has established a
Working Group related to New Technologies,
which is also dealing with refusals to license.
Maybe the outcome of the discussions will shedsome more light on the optimal approach towards
refusals to license.

Ⅶ Conclusions
Open innovation is becoming more important
as a policy in the life sciences in Japan to deal
with all kinds of challenges. No longer arecompanies satisfied by the internal knowledge
base, but they collaborate with other companies,
including start-ups, universities and publicresearch institutes. They use bilateral researchcollaborations, research consortia, in- and out
licensing and spin-offs and spin-ins as ways totransfer technology and develop new ideas.
This open and collaborative environment
might create further opportunities and a platform
for further debate on licensing practices which
are most appropriate in such a context. Whilesetting up research collaborations and consortia,
it is desirable to think pro-actively about IP
management. It is to be expected that inparticular if many parties participate in suchresearch projects, thickets of patent rights might
emerge.
Collaborative
licensingmodelsfacilitating multiple transactions and loweringtransaction costs might thus be a logicalcomponent of open innovation initiatives.
In view of the limited number of Japanese
bioventures most new technologies have to bepurchased or licensed-in from overseas. In thoselicensing negotiations Japanese companies often
experience difficulties with regard to getting
effective access to research tools for a reasonable
price. And even if for now there is not much
empirical evidence that R&D is obstructed bypatent thickets, due to the emergence of newcomplex technologies and research areas such as
RNAi, pharmacogenomics, synthetic biology, etc.,
we cannot exclude that such phenomena will arisein the future.
In dealing with patent thickets and refusals
to license a whole spectrum of remedies isavailable at the interface between patent andcompetition law. Some of these remedies include● 68 ●IIP Bulletin 2009

explicit references to the role of the public
interest. Other remedies will inherently require abalancing of the interests of the patent owner torecoup its investments, the private interests ofthe technology users, the interests of the society
in terms of innovation and dissemination of thetechnology and public health.
Patent pools and clearinghouses have beenstimulated by the Japanese government as apro-innovation instrument to deal with situationsof multiple patents held by multiple patent
owners. However, these mechanisms arevoluntary and until now there are not many
examples in the life sciences. It might bedesirable to further strengthen the debate in thisarea and emphasize the opportunities of suchmodels in the light of open innovation.
Most of the suggestions in this report do not
require complex and time-consuming legislative
revisions, but rather a change in attitude andpractices that translates the open way ofinnovation in an open way of transferringknowledge through responsible IP management.
Choosing this path will not be the line of least
resistance and will require collaboration betweentheGovernment’sIntellectual
Property
Headquarters, the JPO, the JFTC, the CSTP, theJST, all ministries concerned and consultation of
the relevant stakeholders. In the end, it will proveworth the effort of smoothing the way for apriority area like the life sciences optimizing theopportunities offered by open innovation andbalancing the interests of all the stakeholders
concerned.

● 69 ●IIP Bulletin 2009