9 Application Behavior, etc. of Companies, etc. for Sustainable
Economic Growth in Japan
It is extremely important for realizing sustainable economic growth in Japan to establish an
intellectual property system in which the research and development results of a company, etc. areprotected and used effectively as intellectual properties, thereby promoting technological innovation andstimulating economic activities. For that reason, it is essential for planning measures concerning Japanese
intellectual properties to share a common awareness based on statistical data analysis and to deepen
discussions of the intellectual property system.
Based on these circumstances, the following six empirical analyses were conducted in this research:(1) effects of law amendments on the employee invention system; (2) patterns related to the application
behavior of companies, etc. in the high-tech sectors; (3) whether the application behavior of companies, etc.
is changing from quantity to quality; (4) the impact of system change on software patents; (5) thedetermining factor of patent trials and filing objections; and (6) the relationship between company secrets(know-how) and profitability or the sustainable competitive advantage of companies. Revisions of theSurvey of Intellectual Property-Related Activities are also reviewed.

Ⅰ Introduction

property system and related measures: (1) effectsof law amendments on the employee invention
system; (2) patterns concerning behavior related
to the application behavior of companies, etc. in
high-tech sectors; (3) whether the application
behavior by companies, etc. is changing fromquantity to quality; (4) impact from the systemchanges to of software patents on the structure of
the software industry; (5) determining factors forpatent trials and filing objections; and (6) the
relationshipbetweencompany
secrets(know-how) and profitability or the sustainable
competitive advantage of companies.
In addition, revisions of the Intellectual
Property Activity Research are examined in orderto improve the accuracy of the Intellectual
Property Activity Research data that is an
essential base material for the planning ofintellectual
propertymeasuresandtheestablishment of intellectual property strategy incompanies, etc.
It is expected in the future that the results ofthis research and study can be used as basematerial for planning the examination and trial
system at the Patent Office and become valuable
information for supporting the planning of
application strategies for industrial property
rights at companies, etc. by sharing theinformation.
I would like to thank the Policy Planning andResearch Division of the Japan Patent Office forproviding valuable help in conducting thisresearch, Mr. Dominique Guellec of theOrganization for Economic Co-operation andDevelopment (OECD) and Mr. James Rollinson of

The importance of intellectual property is
increasing
rapidlywiththeincreasing
international competitiveness of Japan. In order tobreak out of the worldwide recession that began
in the financial crisis of 2008 and to realize
sustainable economic growth, it is extremely
important to establish an intellectual propertysystem in which the research and development
results of a company, etc. are protected and usedeffectively as intellectual properties and generate
economic value, thereby promoting technologicalinnovation and stimulating economic activities.
Based on this perspective, for planning measures
on intellectual properties in Japan, it is essential
to establish a theoretical foundation based on
statistical data analyses and to deepen discussionof the intellectual property system withawareness of both the government and private
sectors based on its theoretical foundation.
Moreover, there is a worldwide emphasis on
analyzing the effect, etc. of measures forintellectual properties based on the data.
Based on the status of these issues, thefollowing six empirical analyses are carried out inthis report in order to establish a theoreticalfoundation for the intellectual property strategy ofcompanies, etc. in making intellectual properties
into economic values; at the same time, toestablish criteria and indices that contribute to
the planning of measures for intellectual
properties by future governments to ensuresustainable economic growth in Japan; and toreview the impacts in Japan of the intellectual● 1 ●IIP Bulletin 2010

the European Patent Office (EPO) for coming toJapan and providing useful comments.
(Sadao Nagaoka)

2

Ⅱ Research on the application
behavior, etc. of Japanesecompanies, etc.
1

Statistical analyses of the application
related behavior, etc. of companies, etc.
in high-tech sectors

In this report, research data on the trends inpatent application strategy in four high-tech
sectors are connected with PATSTAT and PATR
and characteristics of their application behaviors
are analyzed statistically. According to theanalysis results, the importance of the U.S.A.
market is high in the high-tech sectors and there
are many international applications filed in the
U.S.A. compared with other countries. The usage
situation of the systems of internal priority,
provisional application, or continuous application,etc. in high-tech sectors varies widely by country.
These systems are used in the U.S.A. much morethan Japan and the frequency of usage in Europe
situates it between Japan and the U.S.A. In mostof cases in Japan, a specific invention ends up
being protected by a single patent, while inEurope and the U.S.A, particularly in the U.S.A.,
it is normal to be protected by multiple patents
and the concept of patent family has also become
important for patents in Japan. As causes of thesedifferences, the difference in the systems
established by country is the most important. It isfound that the nationality of applicants is also amajor cause. For example, in the United States
Patent and Trademark Office, European applicants
use the provisional application system much more
often than Japanese applicants. U.S. universities
seek out various patent protection strategies likethe U.S. companies; however, Japanese
universities have no such tendencies.
In addition, as a comparison between fields,
particularly the field of biotechnology, it isconfirmed that the importance of systems ofcontinuous application or provisional application,etc. comes primarily from the high level of
uncertainty of research and development and thewait for the request for review becomes long due
to its long lead time.
Moreover, in the high-tech sectors, it was
found that an application for an invention that is
considered to be an important patent is filed moreglobally than other patents, and various systems
are frequently used for important patents. In
other words, it is possible to say that systems,
such as internal priority and divisional application,
have important roles in protecting valuable
inventions in high-tech sectors.
Finally, the analysis results indicated the highimportance of science and technology documents
as prior art document in high-tech sectors andStatistical analyses of the employee
invention system

The environment surrounding the invention
award system has drastically changed due to theincreasing number of lawsuits recently claiming
remuneration for employee inventions and theamendment of Article 35 of the Patent Act in 2004
(enforcement on April 1, 2005). Under thesecircumstances, first, this research performed aquantitative analysis on the impact the lawsuits
claiming remuneration for employee inventions
and amendment of Article 35 of the Patent Act
had on the employee invention award system ofcompanies. Second, by returning to more
fundamental problems, it analyzed how theemployee invention award system that has been
introduced into companies relates to thecharacteristics of their business, and thereby
examined whether the employee invention award
system has a role as an incentive agreement. The
analysis gave the following results. First, theawards tended to increase significantly for acertain time before and after the amendment of
the Patent Act. Based on the estimated results, it
has become obvious that this increase is not anincrease of payment due to the performance
award system, but can be explained by an increaseof payments due to the award system forapplication. In concrete terms, the award payment
per application increased on average by 32,000
yen. After the amendment of Article 35 of the
Patent Act, it increased by 45,000 yen, an
additional increase of 13,000 yen. According to
the results of this research, there were no distinct
correlations between business characteristics andaward payment, except for business size or
intensity of research and development. Based on
this result, the possibility that award payments bycompanies are established to obtain effects fromincentives was not clearly indicated.
(Koichiro Onishi, Hideo Owan)● 2 ●IIP Bulletin 2010

how capabilities for searching and evaluatingthese documents become important for patentexaminations.
For the analysis of this research, PATSTAT,
which has been making significant progress inrecent years, was used as data source; however, it
was found that PATSTAT had various problems in
the analysis process (see the supplementary
report). One significance of this research isconsidered to be as a contribution to improving
database accuracy by feeding back the problems.
By doing so, it is expected that future researchusing the patent data will be able to show greater
progress. In particular, this research indicates thatthe patent database will contribute greatly to
discussions of measures based on evidence. At
the same time, the analysis of this report islimited due to the current situation of thedatabase. It is necessary to state that the analysis
therefore contains provisional elements.
This research also indicates how the analysis
can be used by each patent family and thepossibilities for their development.
However, due to time and database limits,rigorous empirical analyses using econometricmodels were not able to be implemented in thisreport. When analyzing the determining factors of
the system usage situation, it is necessary tocontrol various factors in addition to thedifference between the systems by country or theattributes of applicants. By using econometricmodels, it is possible to identify the extent of theeffect of the differences in nationality,
organization category, etc. respectively. These
matters will be future issues.
(Naotoshi Tsukada, Isamu Yamauchi, andSadao Nagaoka)
3

quality” are occurring with companies’ patentapplication behaviors. In addition, a “multiplier ofmulticlaim system” was estimated in order toinvestigate whether the introduction of a revised
multiple claim system has allowed the creation ofpatent value that cannot be obtained under the
single claim system. The multiplier of multiclaim
system means a numerical value that is obtainedby dividing the total patent value of theapplications that companies have filed under themultiple claim system by the total patent valuethat would have been realized in cases where thedivided applications for the same number of
inventions that generate the patent value underthe multiple claim system are filed as one claim.
The multiplier of multiclaim system is estimatedby the claim elasticity and the claim discount rateof patent value. When the premium of themultiple claim system multiplier is over 1, a
positive economic significance can be found in the
introduction of a revised multiple claim system. In
the overall estimation results of the sample
companies, a slight premium is found, but thevalue was not statistically significant. However,some technology fields have considerably large
claim elasticity. In these fields, a distinctive
premium may be found.
(Setsuo Yamada)4

In this report, an experimental study
concerning the system reform of software patents
and patent applications by software companies byusing data connecting a field survey of specificservices (information service industry) and patent
data (IIP patent database). In analyzing theapplication structure of software companies,
applicants before the system reform were also
performing manufacturing business; however, thepossibility of filing applications was expanded topure-software companies after the system reform.
The empirical results concerning this point
indicated the following: (1) after the system
reform, the number of minor applicants, who file 5
applications or less in one year, increased; and (2)software companies which also perform
manufacturing business but for which thepercentage of their manufacturing business issmall (companies that are closer to pure-software
companies) filed more patent applications after
the system reform by regression analysis.
Moreover, we reviewed whether it is possible to

Statistical analysis of the patentapplication behavior of companies, etc.
– Changes from quantity to quality –The purpose of this report is to clarify from astatistical perspective, in terms of the patentapplication behavior of companies, whether there
are alternative behaviors to claims that increase
the number of claims per patent application andreduce the number of patent applications and toinvestigate whether these behaviors mean“changes from quantity to quality” in patentapplications. In the results of the statisticalanalyses, distinctive alternative behaviors toclaims were seen and it was verified that patents
with more claims have a higher value. These
results indicate that “changes from quantity to● 3 ●IIP Bulletin 2010

Analysis of the impact of software
patents on the structure of the software
industryextract software patents from the technology
category to which pure-software companies (acompany for which the percentage of softwaresales is 80% or more) apply. As a result, it was
found that many of the patents for whichapplications were filed before the system reformin 1997 and applications by pure-software
companies included a considerable number ofpatents concerning hardware. Therefore, it isnecessary in specifying software patents to
extract them by a method such as doing a searchusing the text of the invention’s name or claims.
(Kazuyuki Motohashi and Masayo Kani)
5following results that basically support theassumptions.
- Based on the number of citations and thetiming of requests for examination, if theinvention has a higher technical value, thepossibility of acceptance of the appeal against an
examiner's decision becomes higher.
- In cases where an appeal against an
examiner's decision is accepted, the profit to thepatent holder becomes larger the higher thetechnical value of the invention. Therefore, thefrequency of requests for appeal against an
examiner's decision becomes higher the higher
the technical value of the invention.
- With regard to an invention with highuncertainty and an asymmetry of information(index: the examination period from the requestof patent examination is long), an appeal against
an examiner's decision will be filed more often;
however, there is a low probability that patent forthese inventions will be granted as a result of theappeal against an examiner’s decision. This
indicates that in cases where an appeal against an
examiner’s decision is accepted, the patents inquestion have great value.
With regard to the determining factors ofobjections and requests for trials for invalidation,
the following results were obtained that also
support the assumptions.
- Both objections and requests for trials forinvalidation primarily concern issues of thenovelty and inventive step of the invention inquestion. Therefore, it is difficult for them to be
accepted if the technical value of the invention ishigh.
- On the other hand, the economic profit to
the petitioner, etc. from cases where the objection,etc. is accepted exists only when the invention’s
technical value is high. Therefore, if the impact
from the latter is more important, the frequencyof objections and requests for trials forinvalidation becomes higher when the invention’s
technical value is high.
- With regard to an invention with highuncertainty and an asymmetry of information(index: the examination period from the request
for patent examination is long) and a patent for
which examination by the Patent Office is moredifficult, if an objection or request for trial forinvalidation is filed once, it is easily accepted. On
the other hand, if the patent is granted, it is still
uncertain whether the patent can restrict othercompanies. Therefore, the frequency of filling
objections and requests for trials is low.

Economic analysis of patent trails andobjections

The purpose of this report was to conduct
empirical analyses of the patent attribute,technology field attribute, or applicant attribute
through which information statements, appeals
against an examiner's decision, objections, ortrials for invalidation are filed or accepted andthereby to contribute to the review of
examinations, the trial system, or the objection
system in order to improve the stability of patentrights. We also focused on the anonymity ofobjections and the effect of deadlines andinvestigated why trials for invalidation did nottake place in the objection system. The major
conclusions are as follows.
The information statement system fulfills an
important role for making patent rights a stablesystem at an early stage. According to thisempirical analysis, the percentage of final
rejections of applications with information
statements is significantly high (based on theestimated result, the marginal effect of therejection rate with information statements isapproximately 16%), and, in case of suchapplications, the percentage of acceptances ofappeal against an examiner's decision on rejection
was significantly low, as well. The effect on thepercentage of acceptances of objections was also
negative, but there was no strong relationship.
Based on the number of citations, the information
statement system targets patent applications withhigh technological value. It is possible to say thatthe system effectively screens patents whichhave a large impact in cases where the patent isgranted by mistake.
With regard to the determining factors ofrequests and acceptances of appeal against an
examiner's decision, the analysis showed the● 4 ●IIP Bulletin 2010

- Reflecting that the objection system isanonymous, while requests for trials forinvalidation are not always anonymous, in cases ofcompanies with large volume of applications thatenables cross licensing, etc., the frequency of
their requests for trials for invalidation becomes
low compared to their objections. In cases ofrequests for trials for invalidation, the cost is
higher and the proceedings are likely to be public.
Therefore, the threshold of an invention’s
economical value as to whether a trial forinvalidation should be requested becomes high.
As a result, it is difficult for patents of companies
with a large volume of applications to be a subject
to requests for trials for invalidation; and if thepatents are granted, only a few patents with very
high value become subject to the request.
In the end, the percentage of listedcompanies among the petitioners of objections is
at the low level of 28%, while the percentage ofindividual persons is 57%. A majority of thepetitioners is individual persons. On the other
hand, the share of the individual persons among
applicants of trials for invalidation was only 3%
before the objection system was abolished. Afterthe abolishment of the objection system, it
increased to 17%; however, the share of individual
persons was very small compared to the cases ofpetitioners of objections. Based on theabovementioned, we assumed that if thepercentage of individual persons in objections ishigher, it is difficult for objections to be alternatedwith trials for invalidation since anonymity isimportant in this field. The class level estimationof IPC resulted in supporting the assumption.
(Kenta Nakamura, Tomoyuki Shimbo, andSadao Nagaoka)
6

inventions secret as company secrets (know-how)and the method of being legally protected by theideological right, the patent right. Therefore, it isconsidered that companies compare and balance
the advantages and disadvantages of making
inventions secret as company secrets (know-how)and then use the technologies and inventions that
become the foundation of their business ascompany secrets (know-how) or as patent rights.
When reviewing past research, as far as I know, it
has not always been clear how much the methodof keeping company secrets (know-how) secretand using them for business contributes to the
profitability of the company or to its sustainable
competitive advantage in comparison with themethod of using intellectual property rights
system, such as the patent right. Therefore, thisresearch clarified these issues empirically. The
major results are as follows.
(i) Japanese companies do not autonomously
consider their own sustainable competitive
advantage or profitability. In other words, they do
not keep their inventions as patents nor keepthem secret as company secrets (know-how) froma strategic perspective. In other words, they
assume to make inventions as patents first. Then,with regard to inventions with characteristics that
do not conform to being patented, it is highly
possible that they keep their inventions secret ascompany secrets (know-how) as an exception.
(ii) Since inventions are kept in secret ascompany secrets (know-how) under this concept,
it was impossible to find evidence thatconcealment by making inventions into company
secrets (know-how) leads to the sustainable
competitive advantage of a company or to its
profitability. Rather, the result was found thatmaking an invention into a patent is moreconnected with a company’s sustainable
competitive advantage and profitability. This
conforms to the results of past research.
(Yoichiro Nishimura)

Relationship between company secrets(know-how) and the profitability orsustainable competitive advantage ofcompanies

7

This research will clarify empirically how
much the method to keep inventions secret ascompany secrets (know-how) will contribute to
the profitability or sustainable competitive
advantage of companies by comparing it with themethod of to using the intellectual property rightsystem, such as patent rights.
There are two kinds of methods for acompany to carry out business and gain profit
from the business or establish sustainable
competitive advantage: the method to keep its

In order to verify the analysis results of thisresearch and seek the possibility of new patentstatistics and economic analysis in whichinternational comparisons are possible, we invited
two intellectuals who have been studying
advanced patent statistics and economic analysis
or have abundant knowledge of patent statistics
databases from overseas and held a discussion
with this Committee.
● 5 ●IIP Bulletin 2010

Discussion with international invited
guestsIn concrete terms, we invited Mr. Dominique
Guellec, senior economist of the Organization for
Economic Co-operation and Development(OECD) and Mr. James Rollinson, administrator of
the European Patent Office (EPO). We held adiscussion with a total of 21 participants on thefollowing three themes: (i) statistical analysis on
the application related behaviors, etc. ofcompanies in high-tech sectors; (ii) statisticalanalysis of the patent application behavior ofcompanies, etc. – changes from quantity to quality--; and (iii) an analysis of the impact of software
patents on the structure of the software industry.
In recent years, a large amount of economic
and statistical research that use patent statistics,
PATSTAT, has been presented in Europe.
PATSTAT is a massive and globally renown
database provided by the European Patent Office,in which patents that were applied for in the Patent
Offices of more than 170 countries and publishedare recorded. This database, in which various kindsof patent information are recorded, is provided at
low price and can be used even by general
university students in a computer environment
without high specialization. In the future, researchusing these helpful patent statistics will be
implemented actively and competitively.
Different from the situation of academic
society, patent offices in the world have not placed
sufficient value on research that uses patentstatistics. The cause of this situation in patentoffices is considered to be that researchers havenot always responded to the needs ofpolicymakers and also that policymakers have notpaid full attention to research that uses patentstatistics. Given this situation, it is very notablethat the Japanese Patent Office quickly becameaware of their importance. The invitedinternational guests indicated that it is importantand necessary for both researchers andpolicymakers to cooperate through various
opportunities.
(Yoichiro Nishimura)define and categorize the industry clearly inaccordance with appropriate standards. In view ofsituations where the industry categories ofcompanies have not been established, if the view
point of an industry category is to identify theactual situation of economic activities moreaccurately, with regard to an industry category
pertaining to intellectual property activities, it isimportant to have a view point to identify its
actual situation appropriately especially byfocusing on its activities, such as research anddevelopment, etc.
We have investigated industry categories
based on individual data from the “Survey ofIntellectual Property-Related Activities”; however,
we have not categorized similar companies withregard to research and development activities
since there are a limited number of companies inthe survey that can be used and there are many
unanswered survey items concerning researchand development activities. It is necessary to
expand data that can be used for analysis to thecategorization of industries from any approach,such as grouping companies deductively inaccordance with the abovementioned similarity
standards
andthenexamining
theirappropriateness, or grouping companies by thesimilarity of their indices of research activity
results and then extracting category standards
inductively.
The conditions have recently been developed.
First, there is information on the names andaddresses, etc. of juridical corporations from thecommercial registration of the Ministry of Justicethat were used for the “Economic Census – basic
survey” in July 2009. By matching applicant
companies’ names with a company database thatis generated based on the “Economic Census–basic survey,” it enables a combination withother statistical survey results and acomprehensive analysis of intellectual property
activities.
The value of industrial property rights or the
profit from acquired know-how, etc. can beconsidered in the intellectual property activities
as reference to added value that is a result of
economic activities. With regard to industry
categories, it is considered that useful categories
can be formulated by establishing category items
based on the size of the indices.
Moreover, industry categories for intellectual
property activities are in the units of a company.
Therefore, it is necessary to investigate from theperspective of regulations in the legal system thatthe difference of a company’s management

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

Reviewing the overall estimation method(1) Investigation into the categorization ofindustries for reviewing intellectual
property activities
In order to increase the usability of statistics
on intellectual property activity, it is necessary to● 6 ●IIP Bulletin 2010

organization causes differences in its intellectual
property activity. The business size of a company
also affects the categorization of industries;
however, , it is important to examine also thetreatment of the company that is positioned at the
top of a business group, such as an operatingholding company, etc., when investigating
industry categories.
It is strongly required to start matching
applicant companies’ codes with uniform company
codes that are generated from the Economic
Consensus promptly.
(Fumio Funaoka)

individual persons, juridical persons, and publicresearch organizations, such as universities, etc.
in Japan.
With regard to the survey items, estimation
method, etc. of the “Survey of Intellectual
Property-Related Activities,” the Japanese Patent
Office or a research committee established by the
Patent Office has investigated them for the past
several years. The Committee for this survey
started by first organizing the problems, and then,investigated plans for improvements forsmall-sized applicants (applicants who filed lessthan five applications in a year under any of thefour Acts (Patent Act, Utility Model Act, Design
Act, and Trademark Act)) in order to reduce theirburden for response, increase the response ratio,
and thereby improve the accuracy of the survey.
(Yoichiro Nishimura)(Resercher: Yoichiro NISHIMURA)(2) Reviewing the estimation method forsmall-sized applicants
In this report, a calibration estimation was
implemented with regard to small-sized applicants
and its appropriateness was examined bycomparing it with the actual population value. As
a result, the following is indicated: if an applicant
is categorized as a small-sized applicant in theyear of the survey, it does not have to be asmall-sized applicant in subsequent years;
therefore, if the estimation for years subsequent
to the year of the survey is implemented by using
all of the collected data for small-sized applicantsin the year of the survey, it is possible to cause a
big error. When estimating for years other than
the year of the survey by using the collected dataof small-sized applicants, it is necessary to
conduct additional operations, such as selecting
the appropriate applicants’ data in light of
population information.
(Takahiro Tsuchiya)
2

Reviewing questionnaire for the Surveyof Intellectual Property-Related Activities

The “Survey of Intellectual Property-Related
Activities” is a statistical survey conducted by theJapanese Patent Office since 2002 in order todevelop base material for planning Japanese
intellectual property measures and for the
purpose of assessing the actual conditions of theintellectual property activities of individual
persons, juridical persons, and public researchorganizations, such as universities, etc. in Japan.
The “Survey of Intellectual Property-Related
Activities” provides much useful information,such as (i) the activity conditions of intellectual
property departments; (ii) the usage situation of
the industrial property right system; (iii) the work
conditions of industrial property rights, etc., foranalyzing intellectual property activities of● 7 ●IIP Bulletin 2010