6

Legal Issues Concerning the Use of Trusts forIntellectual Property

Presently, when intellectual property rights (IPRs) are managed and utilized within a business group orwhen technologies are transferred from universities to the private sector, the rights are managed in a centralizedmanner by way of transfer or commission. However, centralized management through these methods involves
various potential managerial problems.
On the other hand, centralized management by trust, which is positioned between the transfer method andthe commission method, is a potential method for enjoying advantages of both methods.
This report particularly focuses on patent rights and rights to obtain patents among IPRs, and based on theassumption that these rights are to be centrally managed by the trust method, analyzes the eligibility of theserights as trust property, the issues under the Trust Law such as the relationship between the trustor and trustee,
the taxation and accounting treatments related to trusts, and the significance of the trust method. This report
also provides results of the investigation on the trends of use of the trust method in Europe and the UnitedStates.

Ⅰ Current Status of the Centralized
Management of IPRs
This chapter presents actual cases of thecentralized management of IPRs in business groups
and TLOs, where such management is strongly
desired, and clarifies issues found in these cases
while providing examples of the centralized
management of copyrights with the use of trusts,
thereby considering the possibility to apply thetrust method to the centralized management ofpatent rights and other IPRs.
1

Centralized Management of Patents andOther IPRs in Business Groups

One of the effective measures for companies
that belong to a business group to respond tochanges in the business environment while
carrying out their business activities may bereorganization of member companies within thegroup. However, if the transfer of IPRs frequently
occurs within the group whenever suchreorganization is conducted, that would impose
significant costs on the member companies.
Such awareness seems to create needs for thecentralized management of IPRs by a parent
company that has an IP management department orby an IP management company within the group.
There are two types of centralized management:
the transfer method in which the ownership and the
management functions of rights are concentrated to
the IP management company or department, andthe commission method in which the ownership ofrights belong to individual subsidiaries while themanagement functions are concentrated to the IP
management company or department.
The transfer method seems to be efficient and

IIP Bulletin 2003

effective in carrying out IP-related operations aswell as human resource development. However, italso has the following potential problems:c It
isuncertain
whether
centralized
management would be realized in an optimal
manner for the business group as a whole;d Cumbersome evaluation work would be
required for the transfer of rights;
e Risks would need to be taken when providing
compensation for employees’ inventions made insubsidiaries;f Costs would be incurred when subsidiaries
transfer their IPRs to the IP management company
or department.
The commission method, on the other hand, isalso effective from the perspective of operational
efficiency. Furthermore, in this method, as
individual subsidiaries can retain their own patentrights, it is expected that such subsidiaries would
easily understand the importance of strategic
creation of inventions and maintain their incentives
for such creation. However, potential problems also
exist with this method:c It is not clear whether the IP managementcompany or department would be allowed to engage
in obtaining patent rights for inventions made in thesubsidiaries and negotiating licensing contracts orfiling a representative suit as a conventional agent
in the disputes over infringement of patent rights;
d It would be difficult for the IP company or
department to handle IPRs under the strategy forthe business group as a whole due to being
constrained by subsidiaries’ intentions.
2● 48 ●

Centralized Management of Inventions
Made by Universities at TLOs
TLOs are engaged in various activities such as

discovering, evaluating and selecting specificresearch results that can be commercialized,
providing information on specific research results,
licensing patents to private businesses, returning
licensing fees and revenues to researchers,
providingmanagement
advice,technical
instructions and financial support to universities,
and carrying out other activities necessary for
efficient transfer of specific research results.
However, they also have various potential problems
concerning: c how to encourage university
researchers to maintain their incentive for creation
under the transfer method, how to return patented
inventions to the researchers who created themand how to cope with tax risks arising from thetransfer of rights; d how to obtain credit fromprivate companies that are potential licensees
under sublicense contracts; and e how to reducethe burden on researchers under the commission
method.
3

Centralized Management of Copyrights

The Law on Intermediary Business
Concerning Copyrights of 1939 defined an“intermediary business” as an act of agency or
mediation on behalf of copyright owners regarding
contracts for the use of their works for publication,broadcasting, cinematographing or other uses. Thislaw also deemed “obtain[ing] the transfer of
copyrights” to perform, as an occupation, an act ofmanaging the copyrighted works in pursuance of a
specific object on behalf of other persons as an“intermediary business” concerning copyrights
Section 1(1) and (2)). “Transfer of copyrights” inthis provision shall constitute a deed of trust. The
government was actively involved in these types of“intermediary business” (management business):
Any person who intended to engage inintermediary business had to obtain the“permission” of the Commissioner of the Agency of
Cultural Affairs and such person had to also obtainthe “approval” of the Commissioner to specify
rules relating to the royalty rates for the use of theworks.
In 2001, the Law on Intermediary Business
Concerning Copyrights was repealed and the Law
on Management Business of Copyrights andNeighboring Rights (hereinafter referred to as the“Law on Management Business of Copyrights”)
was enacted. Under the new law, joint-stockcompanies are also allowed to engage in the
copyright management business in addition to
public corporations and other associations similar tothem.
In relation to the Trust Business Law, Section
26 of the Law on Management Business of
Copyrights provides that c the provisions ofSection 1 and 2 of the Trust Business Law shall not
apply to persons who engage in the trust businessthat deals with only copyright, etc. under a trust
contract and d trust companies or banks or otherfinancial institutions conducting trust businesses
may also accept the trust business that deals withcopyright, etc. under a trust contract. In theseprovisions, “trust [business]” is intended to
conduct management of rights, which is one of theapplications of trust business under the Trust Law
but is actually governed by the Law on
Management Business of Copyrights rather than
the Trust Law in Japan.
4

Toward the Centralized Management ofPatent Rights and Other IPRs with theUse of Trusts

Since the Law on Management Business of
Copyrights was established, the scope of
copyrighted works to be managed by trust has been
expandedsignificantly.
Nevertheless,most
copyrights that are currently handled in centralized
management are music copyrights, which werecovered by the Law on Intermediary Business
Concerning Copyrights.
Though music copyrights and patent rights are
the same in the sense that both are rights overproducts resulting from creative activities byhuman beings, there seems to be a significant
difference between them in terms of the stability ofrights.
A music copyright comes into force when themusic work is created without any formality
requirements. On the other hand, in the processfrom completing an invention to obtaining a patentright, it is necessary to file an application to the
JPO and go through examination. Furthermore,even after a patent right came into force, it may beinvalidated due to an opposition to the grant ofpatent or a demand for invalidation trial. Since theSupreme Court judgment on the Kilby Patent was
rendered, in particular, the validity of patent rights
has often been examined in infringement lawsuits.
As a result, it seems very difficult to judge thevalidity of patent rights in advance, and a patentright contains unstable factors in comparison with amusic copyright.
In some cases of technology transfer through
TLOs, creative products other than patented
inventions, such as technical know-how, areextremely important and therefore should normallybe transferred along with patented inventions.
There will be needs for the management of suchtechnical know-how as trust property in
combination with patent rights. It is also possible tolegally protect technical know-how other thanpatented inventions by protecting it as “trade
secrets” under the Unfair Competition Prevention
Law. In this case, it is necessary to consider
whether trade secrets can be included in trust
property.

● 49 ●IIP Bulletin 2003

In
considering
whether
centralized
management through trust-based transfer, which iscurrently applied mainly to the management of
copyrights, can also be applied to the managementof patent rights and other IPRs in business groups
and TLOs, it is necessary to examine the eligibilityof such rights as trust property, how to handle
technical know-how (trade secrets) relating topatented inventions, and the roles and functions of
the trustee.

Ⅱ Centralized Management of IPRs
by Trust and Issues to Be
Considered
Where a trust is used for the centralized
management of IPRs in a business group or TLO,
subsidiaries within the business group or
universities (researchers) involved in the TLO can,as the trustors, retain the authority to supervise
license contracts while obtaining profits andachieving the intended management and disposal ofrights. Furthermore, as the rights themselves aretransferred under the provisions of the Trust Law,
the legal relations arising from the use of suchrights will be very clear.
This chapter overviews the legal problems
that are likely to arise from the centralized
management of IPRs by trust. The arguments inthis chapter and subsequent chapters focus onpatent rights in particular among the IPRs.
1

Relevance with the Existing Trust-Related
Laws

The Trust Law and the Trust Business Law
constitute the core of the Japanese trust system.
Article 4 of the Trust Business Law limits the typesof property that may be accepted by a trust
company to c money, d money claims, e personal
property, f land and objects firmly affixed to land,g superficies, and h lease of land. Under the
existing provision, IPRs may not be handled in thetrust business except for trusts concerning
copyrights, etc. under the Law on Management
Business of Copyrights, which is a special law for
the Trust Business Law. However, it is actually
pointed out that how to reduce the cost for the
management of IPRs is a big problem in current
corporate management and that the limitation oftrust property in Section 4 of the Trust Business
Law does not fit the needs for diversification offinancing means. Thus, there is a growing call forthe abolition of the limitation.
The Patent Registration Order provides thatpatent rights may be registered by a trustee.
Accordingly, within the framework of the existing
law, such trustee registration of patent rights may
be allowed if it is conducted not by a trust company

IIP Bulletin 2003

that is engaged in the trust business but by a parent
company of a business group for the perspective ofconcentrated management. However, this method
may not be applied in the course of commercial
trusts and therefore it is hardly utilized in thepresent situation.
Furthermore, for the purpose of promoting
securitization of IPRs, it is theoretically possible
within the framework of the existing law toestablish a special-purpose trust for such rights
under the Law on Securitization of Assets.
However, as strict requirements should be satisfied
for establishing such trust, this method is also
hardly utilized in reality.
2

Eligibility of Right to Obtain a Patent,
Patent Right and Know-How as Trust
Property

The Trust Law seems to stipulate four
requirements for property rights to be generally
considered as trust property: c being convertible
into money; d being positive property; e beingtransferable and disposable; and f being inexistence and specific in nature.
Convertibility into money means that trust
property has monetary value and is able to beassessed in monetary terms. Since a “patent right”
is a property right that can be handled intransactions or mortgages, it can theoretically beassessed in monetary terms and therefore be
included in the scope of “trust property.” Similarly,
a “right to obtain a patent” can also be included in
the scope of “trust property” as it also has
characteristics of a property right and cantheoretically be assessed in monetary terms.
Though it is somewhat difficult to evaluate a “rightto obtain a patent” and a “patent right” to convert
them into money, the problem of doing so is merely
a practical one and would not be a legal obstacle
when establishing a trust for these rights. On theother hand, “know-how” serves as valuable“property” in the actual economy and society, as
does a “right to obtain a patent”. In reality,
know-how is transferred or licensed to a third party,
and it is even used as investment in kind in thecase of establishing a joint-stock company or
issuing new stock. Considering such ability to be
used as investment in kind, know-how also seems
to be “convertible into money” in the same way as
is a patent right.
Positive property refers to claims, as opposed
to negative property such as debts. Article 1 of theTrust Law limits the subject in trust to “property
right,” which seems to refer to positive property. In
light of this, a trust may not be established onlywith respect to negative property or with respect to
a combination of positive property and negative
property.
Both a “right to obtain a patent” and a “patent● 50 ●

right” satisfy the requirement of being transferable
and disposable, but it should be noted that thescope of a “right to obtain a patent” includes a“right to be mentioned as inventor.” “Know-how”
also seems to satisfy this requirement because theright to exploit or use know-how can be granted toa third party under a transfer or licensing contract
in the same manner as a patent right.
With respect to existence and specificity, apatent right satisfies the requirement of being inexistence and specific because it comes into force
when its establishment is registered (Section 66 of
the Patent Law). On the other hand, a “right toobtain a patent” shall not be effective against a third
party unless a patent application is filed (Section
34(2) of the Patent Law). As a result, there is no
way to make public and effective a “right to obtain apatent” before the filing of a patent application,
which would cause considerable instability inestablishing a trust for such right. “Know-how” canbe specified by distinguishing particular confidential
information as know-how from other information
retained by a company. It is also possible to use
authentic documents on facts and tests prepared bya notary public (in this case, the exact portion that
constitutes know-how is documented andspecified.) Thus, know-how also seems to satisfy
the requirement of being in existence and specificin order to be included in the scope of trust
property.
Considering these eligibility requirements fortrust property, it cannot be denied that there is a
doubt about the stability of establishing a trust for a“right to obtain a patent” before the filing of apatent application and for “know-how,” because
they cannot be made public and therefore shall not
be effective against a third party. It is necessary tocontinue detailed discussions on the eligibility fortrust property, including the development of means
to make such right and know-how effective to athird party.

4

In the current trust business field in Japan,
there is no trust company under the Trust Business
Law. Therefore, in the case of the centralized
management of patent rights by trust, whether aparent company (IP management company) of abusiness group or a TLO is eligible as trustee will
be a major problem. In light of the recent trend of
deregulation and taking into consideration thetechnical knowledge necessary for the centralized
management of “rights to obtain patents” or“patent rights,” it seems necessary to review theregulations on eligibility as trustee.
Should a trust bank, which is engaged in thecurrent trust business, act as a trustee in a trust fora patent right, the bank is likely to use an expert as
an assistant or an attorney under the Trust Law
because advanced technical knowledge is required
for establishing a right to obtain the patent,
maintaining and utilizing the patent right anddefending against attacks from a third party.
5Powers of Trustor

The trustee has, in principle, an exclusive
management right to make management decisions
with respect to establishing a “right to obtain apatent,” maintaining and managing a patent rightand carrying out licensing negotiations or lawsuits.
In other words, the trustee alone has the power ofdisposal in the trust relationship whereas thetrustor in principle has no power concerning
disposal but retains the status of the party to set an
objective. However, where the trustor’s instruction
power is so strong that the trustee’s power
becomes weaker or extinguished, such a trust
would be a passive trust and therefore beinvalidated.

Relationship between the Trustor and theTrustee and the Duties of the Trustee

Section 20 of the Trust Law provides that thetrustee shall handle trust property with the care ofa good manager (duty of care). The trustee shallalso bear the duty of loyalty not to obtain trust
property as his own property or act in conflict with
the interests of the beneficiary (Section 22), theduty not to delegate but to, in principle, personallyconduct trust services (Section 26), the duty ofsegregation of trust property from his own property
or other property (Section 28), and the duty toprovide information. These duties are necessary forachieving the centralized management of IPRs as
the trustor desires. They constitute the core of thetrust and “cannot be deleted.”
6

3

Eligibility of Trustee

Protection of Trust Property
Bankruptcy of the Trustee

Upon

The trust relationship terminates when thetrustee is declared bankrupt. In this case, since
trust property is not included in the trustee’s
liability property that serves as reserves for debts,
the trustor or beneficiary may be allowed to
execute the right of resumption, by reason of his
ownership of the trust property, against thetrustee’s bankruptcy administrator. This is called“bankruptcy isolation function” in trust and it
seems to be one of major advantages in using atrust for the centralized management of IPRs.
Accordingly, licensing contracts concerning “rights
to obtain patents” or “patent rights” will continue
to be effective even after the trustee is declaredbankrupt.

● 51 ●IIP Bulletin 2003

Ⅲ TaxationandAccounting
Treatment for the Centralized
Management of IPRs by Trust
1

General Principles for Taxation for Trustestablishes a trust. In the former case, theaccounting should be processed under the Income
Law while in the latter case and the case where theinventor is required to report to the corporation
where he belongs, the accounting should beprocessed according to the rule that the trustee
should report to the corporation.

One of the major general principles under the
tax laws is the principle of taxation on the actual
beneficiary. Under the trust system, trust property
formally belongs to the trustee but it substantiallybelongs to the beneficiary. For this reason, under
the tax laws, trust property is in principle
recognized as belonging to the beneficiary andtaxes are imposed on the beneficiary with respect
to incomes arising from the trust property.
As for corporation tax, in principle, c thebeneficiary of a trust where it is specified, or d thetrustor of trust property where the beneficiary is
not specified or absent, shall be deemed to own thetrust property and therefore shall pay corporation
tax with respect to incomes and expenditures
arising from the trust property.
The same applies to income tax andconsumption tax. In principle, the beneficiary or thetrustor shall be deemed to own the trust property
and therefore shall pay income tax with respect toincomes and expenditures arising from the trust
property as well as be subject to the application of
the Consumption Tax Law with respect to thetransfer of assets that are included in the trust
property.
In conclusion, taxation on a trust for thecentralized management of IPRs will be neutral andclear, and there will be no detrimental tax treatmentin the case where a trust is used for the centralized
management of ＩPRs.

A trustee shall be responsible for various
duties under the Trust Law. Among them, c theduty of care (Section 20), d the duty of loyalty(Section 22), e the duty not to delegate (Section
26), f the duty of segregation (Section 28), and g
the duty to provide documents (information) are
related to the centralized management of “rights toobtain patents” and “patent rights.”
These duties are expected to bring aboutproper centralized management for business groups
or universities. Strictness is needed for the
management of “rights to obtain patents” or“patent rights” in particular because themanagement of these rights requires a steadybuildup of efforts.

2

2

Accounting Treatment

In carrying out the accounting for a trust, it isimportant to consider for whom (e.g. the trustee,beneficiary or trustor) and for what purpose it is tobe carried out.
According to the current accounting practices,
the accounting procedures are carried out as if thebeneficiary (trustor) himself owned trust property,
with the trust relationship being deemed as achannel. For this reason, the accounting is
processed and disclosed in accordance with thebeneficiary’s objective for the trust both on the partof the trustee and the beneficiary (trustor).
In the case of centralized management within abusiness group, consideration should be given to
the same treatment as consolidated accounting, thetreatment of license fees, and the treatment oftransfer/disposal of the beneficial interest in trust.
In the case of centralized management by a TLO,
consideration should be given separately to thecase where the inventor establishes a trust and thecase where a university or other corporation

IIP Bulletin 2003

Ⅳ Significance of the Centralized
Management of IPRs by TrustThis chapter explains how successfully thetrust method will solve problems that are evident in
the current centralized management according to
the transfer method and the commission method,which are addressed in Chapter I.
1Possibility of Realizing
Centralized ManagementaProperPossibility of Returning Benefits andProviding Incentives to Inventors

A beneficial interest in trust that is attributed
to the inventor according to a trust for a third party
seems to be excluded from the employee’s right to“a reasonable remuneration” under Section 35(3) ofthe Patent Law. A beneficial interest in trust is aright that is specifically created under the Trust
Law, and when IPRs are transferred from a
subsidiary to the IP management company or
department for centralized management by trust,the beneficial interest in trust is to be automaticallyattributed to the beneficiary, e.g. an employee or
researcher who is employed by the subsidiary.
Therefore, the beneficial interest in trust shall notconstitute “a reasonable remuneration” under the
Patent Law (Section 35(2)) or “wage” under the
Labor Standards Law (Section 11) but be provided
to the employee or researcher as a kind of incentive
payment.

● 52 ●

3

Possibility of Solving Problems Arisingfrom the Transfer of Rights

The principle of taxation on the actual
beneficiary applies to taxation for trust. Accordingly,
even when a “right to obtain a patent” or a “patentright” is transferred or the title to such right ischanged to the trustee, it is not necessary toevaluate the right. Compared with the transfer
method, the trust method is expected to enablebusiness groups and universities, which are likely
to create an enormous number of inventions, tosignificantly reduce the burden and costs forcentralized management. The trust method also
makes it possible for them to avoid tax risks due toprovisional evaluation of rights, which may occur
under the transfer method.
Furthermore, where there is no chance for thetrustee to sufficiently utilize a patent right that is
entrusted by a university, the trust contract may beterminated and the patent right shall be
immediately returned to the university (orresearcher), which will enable the university tosearch for another way of utilizing the patent right.
In this case, also unlike the transfer method, it is
not necessary to evaluate a patent right for thetransfer, and a patent right that is not utilized
effectively by the trustee can easily be returned tothe university.

Ⅴ Survey on the Actual Situation of
the Use of Trusts for IPRs in
Foreign Countries
This chapter addresses the results of thesurvey on the actual situation of the use of trusts
for IPRs and the centralized management of suchrights in foreign countries.
As examples of the use of “trusts” for IP in the
United States and European countries, this survey
revealed that trusts were used for the managementof copyrights by a copyright management
association (Germany), the management ofroyalties (offshore regions) and securitization (theU.S. and the U.K.)
On the other hand, TLOs in the United
Kingdom and the United States operated as
fiduciaries, though there was no particularmanagement scheme for patent rights and other
IPRs that directly used trusts. TLOs in the targetedcountries showed interest in a management
scheme that used a trust and emphasized“interaction and joint research between IP experts
and trust experts” as one of the future tasks. It was
highly surprising that there was almost nointeraction between these experts even in the
United Kingdom where the trust system was born
and the United States, which had the mostadvanced trust system in the world. This fact

underlined that the discussion at this Committee
in Japan was ahead of the discussion in the UnitedStates and European countries in this field.
Another suggestion obtained from this survey
was that there was a substantial need forconsidering tax benefits in order to operate a trust
scheme for the management of rights to obtainpatents and patent rights. Management of rights toobtain patents and patent rights centrally rather
than individually will be deemed as a kind of
business that uses a trust, whether it isprofit-oriented or not. In order to provide
incentives to use the trust method as amanagement scheme, it is desirable that tax
benefits are granted for revenues from suchbusiness. In this respect, one future task is toconsider what tax benefits may be granted from thepolicy perspective.

Ⅵ Toward the Realization of theCentralized
Managementof
Patent Rights by Trust
1

Current Centralized Management of IPRsc The transfer method, which is one of TLO’s
methods for managing inventions made byuniversities, has major operational problems suchas the necessity for the evaluation of inventions tobe transferred and the tax treatment. On the other
hand, under the commission method, the intentionsof university researchers will easily be reflected intechnology transfer but the researchers are
required to manage their own rights, which will
increase their burden in research activities.
d The transfer method and the commission
method are also adopted for centralized
management in business groups. The transfer
method raises the same problems as in the case ofcentralized management in TLOs, the necessity forthe evaluation of inventions to be transferred andthe tax treatment. There are additional concerns
about this method such as the possibility that theinterests of the IP management company or
department would come first and the issue ofcompensation for employees’ inventions made insubsidiaries. On the other hand, in the case of thecommission method, there is concern that the IP
management company or department would beconstrained by the intentions of subsidiaries, which
are the owners of IPRs, and would have difficulty incarrying out the strategic management for thebusiness group as a whole.
e The use of trust for the centralized
management of IPRs will realize an intermediate
management method between the transfer and thecommission methods, which will be able to solve
various problems.
f Copyrights are successfully handled in● 53 ●IIP Bulletin 2003

centralized management through trust-basedtransfer under the Law on Management Businessof Copyrights and Neighboring Rights. However,the subjects managed under the Law are limited tocopyrights (and neighboring rights), and in light ofthe difference between copyrights and patent rights,
it is impossible to apply this system to the
management of patent rights without any
modification and therefore further consideration isrequired.
2

Problems Arising from the Centralized
Management of IPRs by Trust(1) Institutional limit of the use of trust
schemeAs IPRs are not included in the types ofproperty in trust listed in Section 4 of the TrustBusiness Law, it is currently impossible to carryout the centralized management of IPRs by trust as
a business. However, in light of the recent socialand economic situations, IPRs should be included in
the types of property in trust under the TrustBusiness Law or such limitation of property in trust
should be abolished.
(2) Eligibility as Trust Property
Rights to obtain patents and patent rights
seem to generally satisfy the requirements for trust
property(convertibility
intomoney,
existence/specificity, transferability and being as
positive property). However, since there is no way
to make public “rights to obtain patents,” whichraises an issue of “specificity,” it will be necessary
to discuss means of public notice. Dueconsideration should also be given to the dual
structure of a right to obtain a patent that contains
the transferable portion (title to the right) and thenontransferable portion (right to be mentioned as
inventor) as well as its nature of being contents thatare liable to change.
There is also no means to make publictechnical know-how (trade secrets). However, inlight of the current activities involving technology
transfer and licensing, the use of the trust system
would be less effective if a trust may not beestablished for technical know-how together withthe patent right. In this regard, it is necessary to
sufficiently consider how to specify technicalknow-how as the contents of know-how wouldchangesignificantly
dependingonthecircumstances.
(3) Relationship between the trustor and thetrustee
The types of duties to be born by the trustee
are the same irrespective of the relationshipbetween the trustor and the trustee, but the scopeof such duties may be expanded or reduced
according to special contracts. In the case where
the trustee has gone bankrupt, trust property must
be secluded from the trustee’s property in the

IIP Bulletin 2003

separate management and therefore rights to obtainpatents or patent rights, which are trust property,
will be legally protected (bankruptcy isolation).
3

Accounting and Taxation Treatment(1) Accounting treatment
Since the trustee’s accounting is for the sakeof the beneficiary, the trustee should prepare
financial reports and basic materials as required by
the beneficiary. In the case where the beneficiary isa corporation, the beneficiary’s accounting is for thesake of the parties concerned, and therefore it
should be processed under accounting standards
that are generally considered fair and appropriate.
In the case where the beneficiary is an individualsuch as a university teacher, the accounting isbasically needed for his income tax accounting.
(2) Taxation treatment
As revenues from trust property shall not be
attributed to the trustee or included in trust
property under the tax laws, the tax for the trust is
imposed on the beneficiary or the trustor. Where
beneficial interest in trust is transferred, it isdeemed as transfer of ownership and subject totaxation.
4

SignificanceoftheCentralized
Management of IPR by Trustc Where a trust is used for the management in abusiness group, it will bring about advantages ofboth transfer and commission methods.
d As the trustor retains the beneficial interest in
trust, revenues such as royalties may be returnedto the trustor.
e The trustee shall bear various duties including
the duty of care and the duty of loyalty, which willrealize proper management of IPRs.
f Due to pass-through taxation for trusts, more
economic benefits are expected than in the case of
the transfer method or the management method
where an exclusive license is granted to the
manager.
5

Institutional
DesigningfortheCentralized Management of IPRs by Trustc Management of rights to obtain patents orpatent rights requires technical knowledge on the
management and utilization of such rights. For thisreason, where the trustee builds up anotherscheme and uses an expert as an attorney, it isnecessary to clarify the burden sharing between
the trustee and the attorney in advance.
d The major opinion was that, considering thecharacteristics of the centralized management ofrights to obtain patents or patent rights by trust,the current requirements for the entry into trust
business should be relaxed so as to only require the● 54 ●

registration to the competent minister as applied
under the Law on Management Business of
Copyrights and Neighboring Rights. On the other
hand, some suggested that consideration should begiven to consistency with statutory regulations(approval and license) that are imposed on generaltrustees of commercial trusts.
（Senior Researcher: Seiichi Ban）

● 55 ●IIP Bulletin 2003