1 Intellectual Property Rights System Contributing to Creationof Innovation
This study is designed to produce basic materials for considering a patent system that is the mosteffective for creating innovation. As the patent system entails a large number of problems, this study takes
up and considers three challenges that are thought to require urgent solutions. Regarding “problems
regarding universities as new patent system players,” the introduction of the easier requirements forpatent application filing dates to be accorded in line with Article 5 of the Patent Law Treaty and theextension of the grace period between the disclosure of research achievements and relevant patent filings
are expected to help protect inventions at universities appropriately, and contribute to promoting
innovation. Regarding “problems related to technology standards,” some organized mechanism is proposed
to restrict the exercise of patent rights incorporated into technology standards that have a certain or higher
level of public nature. As for “problems regarding research tool patents,” this study reached a conclusionthat the present guideline-based approach has produced some results, while whether to restrict the effectof research tool patents must be considered further.

Ⅰ Introduction

expand their profit.
However, as users and uses of intellectual
property rights are diversified along with
innovation forms, whether the current patent law
framework created 50 years ago could work topromote innovation over the coming decades has
been questioned. Similar questions have comefrom industry and other people about the U.S. andEuropean patent systems.
This study aims to create basic materials forsurveying and analyzing the effects of intellectual
property rights systems on R&D and other
innovative operations in view of cutting-edge
overseas studies on innovation and intellectual
property and for thoroughly considering the mosteffective intellectual property rights system forcreating innovation.

As international competition has intensified
on the globalization of the world market in recent
years, enterprises have globalized theiroperations and striven to create new added value.
Meanwhile,
rapid
information
technology
development has allowed people throughout theworld to immediately share new academic andtechnological information through the Internet.
The environment surrounding innovation as thesource of added value has changed dramatically.
In line with such changes, innovation forms
have expanded their diversity to include theso-called “broadly defined open innovation,”where enterprises take advantage of others’
business resources for research and development
operations, as well as so-called “closed
innovation” where enterprises utilize their own
business resources for such operations. In recent
years, open innovation has made further progress
across walls between enterprises and universities,
and across national borders. At the same time,
forms for protecting R&D achievements havebeen diversified to include the management ofsuch information as business secrets, as well as
the utilization of patent and other intellectual
property rights systems.
In the meantime, intellectual property rights
have expanded their roles not only in protecting
relevant R&D achievements, but also inmediating the utilization of licenses and others’
business resources (as the technologicalcurrency). Inventors’ objectives for acquiring newrights have shifted to their future enforce of theserights or their licensing at home and abroad to

IIP Bulletin 2010

Ⅱ Innovation
andIntellectual
Property Rights System
Chapter II first outlines U.S. and Japanese
intellectual property policies. Next, the chapter
reviews major economic studies focusing on therelationship between the patent system andinnovation, in an attempt to analyze effects of thepatent system and pro-patent policies oninnovation. Lastly, the chapter discusses
problems with the intellectual property rights
system under the open innovation strategy that alarge number of enterprises have proactively
promoted. It also explains reasons for adopting
key points to be discussed in detail in the later
chapters.

● 1 ●Ⅲ Responding to Diversification ofPatent System Players
1loss of novelty.
The United States has a provisional patentapplication system in which formal patent claims
are not required. The Patent Law Treaty has aclause providing for the relaxation of therequirements for a patent application filing date tobe accorded. A patent claim scope does not haveto be submitted to allow such filing date to beaccorded. Requirements regarding language for a
description are also eased (Article 5, Patent Law
Treaty). The European Patent Treaty includes aclause similar to Article 5 of the Patent Law
Treaty, allowing a patent application to be filed
without any formal patent claim.

Universities and research organizations
as new players

Under the closed innovation paradigm, large
enterprises chose to be independent for researchand development, establishing in-house research
centers to cover from R&D to commercialization.
However, as technologies have grown more
complex and advanced with the technologicaldevelopment accelerated the importance of open
innovation has attracted attention. Under the
open innovation paradigm, it is important forenterprises to efficiently introduce resourcesfrom others. In this sense, universities’ role assuppliers of technologies (inventions) has grown
more important.
In
line
with
relevant
legislative
developments including the enactment of the
TLO (technology licensing organization) law and
the Japanese-version Bayh-Dole Act, universities
and the like have established rights to theirresearch achievements and developed systems
for transferring research achievements to theindustry sector. Statistical data show anincreasing number of joint and contract research
projects at universities, indicating steadyprogress in academia-industry cooperation. But
utilized patents’ share of total university-owned
patents has declined, indicating the absence ofprogress in the utilization of university-owned
patents. It has also been found that many
universities have been agonizing over how tobalance the disclosure of research achievements
and relevant patent applications.
Based on this situation, this study
considered how best to promote universities’
patent applications without affecting invention
incentives for university R&D staff, and a patent
system that promotes higher-valued patents.

(2) Overseas interview survey
The survey found that U.S. universities areproactively taking effective advantage of theprovisional patent application system and thegrace period to acquire useful (valuable) patents.
As soon as inventions are reported, U.S.
universities file provisional patent applications tosecure filing dates. Next, they conduct additional
tests while receiving advice from TLO(technology licensing organization) staff and otherexperts on the commercialization of inventions.
These universities reflect the test data indescriptions for formal patent applications toimprove relevant patent values. They also lookfor enterprises as their potential licensees andreview patent policies through communications
with these enterprises in a bid to acquire patents
meeting business strategies. U.S. universities are
striving to take advantage of the provisional
patent application system and the grace period toacquire more valuable patents.
(3) Domestic interview survey
The survey of universities in Japan focusedon the grace period and the U.S. provisional
patent application system. It found that every
Japanese university views the grace period as an
exceptional tool. Few universities haveproactively taken advantage of the grace period.
Some universities said that when it is difficult todecide whether to file patent applications for
specific inventions, they would publish theinventions through academic conferences andwatch the industry sector’s responses before
making decisions. If enterprises make inquiries
about the published inventions and indicate theirpotential commercialization, relevant universities
may utilize the provisions for exceptions to lackof novelty of invention to file patent applications.

(1) Relevant systems in Japan and foreigncountries
Japan has admitted a grace period of up to six
months between the disclosure of researchachievements through academic conferences or
publications and relevant patent filings. A
one-year grace period has been set up under the
first-to-invent principle in the United States. In
Europe, no such grace period is adopted in regard
to the disclosure of research achievements
through academic conferences or journals,
although some special exemptions exist for the● 2 ●IIP Bulletin 2010

used. If patent rights are enforced against
technology standard users after the development
and diffusion of the standards, the so-called“hold-up problem” may emerge.

If no response comes from enterprises, they do
not file patent applications.
Two patterns for utilizing the U.S.
provisional patent application system wereidentified. The first pattern strategically takes
advantage of the system to secure filing dates andthe first-to-file status under Article 102 (e) of the
U.S. Patent Act. This pattern is used for cases
where many U.S. rivals conduct research inbiotechnology and other areas featuring fierce
research and development competition. In thesecond pattern, universities choose provisional
patent applications as an emergency measure,when they have no sufficient time to prepare
formal applications with the presentation of
inventions at academic conferences scheduled tocome soon.

(2) Patent poolIf patented inventions are incorporated into
technology standards, technology standard users
will have to be licensed by patent holders to
implement the relevant patented inventions. If
more patented inventions are incorporated into
technology standards to expand the number ofpatent holders, separate licensing negotiations on
individual technologies may be painful for bothtechnology standard users and patent holders. In
order to solve this problem, patent pools havebeen formed and utilized effectively.
As representative patent pools, this reportoutlined the MPEG patent pool, the DVD patentpool, and the 3G patent platform.
The patent pools for blanket licensing forstandardized key patents have played a key role infacilitating the utilization of standard technologies,
working effectively to promote innovation. A
problem with patent pools is that the fairness
cannot be secured between faithful licensees andthose that use technology standards while failingto be licensed to do so. Another problem is thatthe total royalty fees for one product using
multiple technology standards can be very high,even with a licensing fee for each patent pool set
at low levels, because technology standards are
established on a technology-by-technology basis.

(4) Consideration and proposals by thecommittee
Based on the above survey results, thecommittee has considered patent systems topromote universities’ patent filings for theirresearch achievements and enable theiracquisition of useful (valuable) patents. It
compiled the following proposals:- In order to promote universities’ patent filings,
Japan should consider easing the requirements
for filing dates to be accorded. In a potential
measure to ease the requirements, Japan may
introduce a patent filing system based on Article
5 (filing date) of the Patent Law Treaty. Taking
into account benefits to Japanese universities,
relations with foreign applicants and adverse
effects on the patent application screening
procedure, Japan should consider an optimum
system to promote innovation.
- The period in which exceptions to lack ofnovelty are accepted should be extended fromthe present six months to one year.
- The academic organization designation systemshould be abolished.

(3) Technology standards and outsiders
If an enterprise has an indispensable patent
for a technology standard, refuses to take part in apatent pool, and independently enforces therelevant patent against users of the technology
standard, the hold-up problem may emerge.
Hereinafter, such an enterprise is referred to as
an “outsider.”Outsiders are divided into the following four
categories, with different countermeasures foreach:(i) Enterprises committed themselves toendorseRAND(reasonableandnon-discriminatory) terms and conditions
upon the creation of the relevant standards,
but refused to take part in patent pools andhave imposed higher royalty fees on
licensees.
(ii) Enterprises take part in the standardization,refrain from disclosing their patents inviolation of the rules of relevant

Ⅳ Responding to Diversification ofTechnology Utilization Forms
1

Technology standards problems(1) Problems
As open innovation makes progress,
technologies are being standardized mainly inelectronics, information and communications
areas. Patented inventions incorporated into
technology standards may not be substituted forany other technologies as far as the standards are
IIP Bulletin 2010

● 3 ●standardization organizations while knowing
the possible adoption of the patents for the
relevant standards, and enforce the patents
after the standards become popular.
(iii) Enterprises have not been engaged in thestandardization but reinforce patent rights
after the creation of relevant technology
standards.
(iv) Enterprises do not cooperate in thestandardization.
Holders of indispensable patents for standards
are so diversified that R&D specialist enterprises,
universities, patent management companies andother entities that do not implement patents areincluded into holders of indispensable patents forstandards. If these entities refrain from taking
part in patent pools and enforce patents against
users of technology standards after thedevelopment and spread of the standards, thehold-up problem may emerge. At the same time,
however, these entities are actually viewed asholding valuable patents and contributing topromoting innovation. In discussing the hold-up
problem, therefore, the treatment of such entities
must be considered prudently.

into standards, irrespective of whether they had
participated in the standardization and refuse to
license others to use relevant patented
technologies, it may constitute private monopoly
or refusal to deal. Patent holders that did not takepart in the standardization but have left
technologies subject to their patents to beincorporated into the standards may have noproblem, even if they refuse to license others to
use these technologies.
(6) Consideration and proposals by thecommittee
Based on the survey results, the committee
considered the relevant problems and reached thefollowing conclusions:- Patent holders for technology standards thathave a certain or higher level of public nature
should be restricted from exercising patents
incorporated into the standards, irrespective ofwhether they are outsiders having no relations
with the technology standards.
- In restricting patent holders from exercising
their patents incorporated into technology
standards, Japan should consider an organizedmechanism in addition to the utilization of thecompulsory license system and the theory ofrights abuse.
- Under the organized mechanism:* A certification organization will certify
technology standards meeting certain
requirementsaspublictechnology
standards.
* The certification organization will takemeasures to secure technology standard
users’ utilization of patented inventions(technologies) incorporated
intothe
relevant standards.
- A legal ground for the above organizedmechanism should be considered.

(4) Solutions to hold-up problem: Utilizationof compulsory license system
This study looked into foreign countries’
compulsory license systems cited as one ofapproaches for solving the hold-up problem. Many
countries including Japan have regulations toforce patent holders to enforce patents for public
interest, when their patents are effectively usedwithout being enforced. Some countries including
the United States and Britain have regulations on
the utilization of patented inventions for national
projects.
In Japan, relevant working groups andresearch studies have considered the utilization of
the compulsory license system to solve thehold-up problem. Given the absence of cases forthe utilization of the system and the problem of
coordination with foreign countries, however,many people are cautious of utilizing thecompulsory license system.

2

Problems regarding research tool patents(1) Problems
Life science research tools including
genetically engineered plants/animals andscreening methods are universally used to makecontributions to the promotion of research. At thesame time, many of them are not very
substitutable. Patents on such upstream life
science research technologies could become verystrong and wide rights, greatly affecting
subsequent research and downstream R&D
operations.

(5) Competition law-based approach
In 2005, the Fair Trade Commission
published an antimonopoly law-based approach on
the formation of patent pools for the technology
standardization, specifying its view on patent pooloutsiders. According to the approach, if patent
holders have made proactive efforts to havetechnologies subject to their patents incorporated● 4 ●IIP Bulletin 2010

(2) Relevant Japanese and foreign systems
Article 69-1 of Japan’s Patent Law provides
that a patent right shall not be effective against
the working of the patented invention for“experimental or research purposes.” But theinterpretation of “experimental or research
purposes” is not clear. The general interpretationof “experimental or research purposes” in Article69-1 of the Patent Law must depend on academic
theories in the absence of sufficient judicial
precedents.
A commonly accepted one among academic
theories is the so-called Someno theory thatclassifies experiments or research by target andobjective and limits the experimental or research
purposes to “technological development.”
Although Europe as well has regulations
regarding the exception of experimental or
research purposes, the regulations seemed tohave been strictly interpreted in judicial
precedents.

(5) Consideration and proposals by thecommittee
Based on the above survey results, thecommittee has considered relevant matters andreached the following conclusions:- We must continue to consider whether
restrictions should be imposed on the effects ofresearch tool patents.
- The guideline-based approach is thought to haveproduced certain results at present.

Ⅴ Systemtoexamination1

publicPublic examination system issues(1) Information system
Japan’s patent system has adopted an
information system to accept information fromthe general public, to secure the accuracy andpromptness of patent examination. Under the
information system, anyone can inform the Japan
Patent Office commissioner that a patent filingcorresponds to a reason for refusal and that somepatent constitutes the ground for invalidation.
The information system has apparently
contributed to improving patent examinations, byallowing public-provided information to beeffectively used for real patent examinations.

(3) Past consideration
Relevant working groups and researchstudies have considered the problems withresearch tool patents, and concluded that thecommonly
acceptedinterpretationof“experimental or research purposes” has had no
problems. Most of problems with research tool
patents have no relations with the use of patented
inventions themselves for research purposes.
Therefore, the application of the exception for“experimental or research purposes” in Article69-1 of the Patent Law is denied. The utilizationof the compulsory license system has also been
considered. The conclusion says that it is not
appropriate to revise the compulsory license
system or its operation at a time when theessence of the problem has yet to be specified,
and that we should carefully watch progress inrelevant discussions at home and abroad, find a
specific direction of the relevant issue, and take aprudent approach.

(2) Early
patentexamination
andinformation systems
The JPO may adopt an early patentexamination system to give priority to patentapplications meeting pre-fixed conditions, as has
been requested by patent applicants. As requests
have increased for subjecting patent applications
to the early examination system, meanwhile, thenumber of cases in which patent applications are
examined before their publication has been
increasing. Some people have noted that if theearly examination system is proactively used andif the number of cases where patent applications
are examined before their publication increases, it
may reduce the opportunities for public
examination of patent applications before theissuance of patents.

(4) Guideline-based approach
At present, guidelines are developed andpublicized for facilitating the utilization ofresearch tool patents. In Japan, the Council for
Science and Technology Policy has published the
Guidelines for Research Licenses for Intellectual
Property
RightsStemmingfrom
Government-Funded Research and Development
at Universities, and the Guidelines for Facilitating
the Use of Research Tool Patents, in a bid tosecure the smooth use of research tool patents.

IIP Bulletin 2010

secure(3) Consideration and Proposals by thecommittee
Based on the above survey results, thecommittee has considered relevant matters andreached the following conclusions:- If an early examination is requested without arelevant patent application being published, the● 5 ●applicant should be required to request thepatent application to be published at the sametime as the early examination request is made(Article 64-2, Patent Law). (Or, the patentapplication should be published forcibly upon theearly examination request, even if the request is
made within 18 months after the filing date.)- In the following cases, the introduction of theprocedures for examining the validity of rights
after their issuance should be considered. But
the procedures should be considered carefully,
so as to prevent the procedures from becoming
excessively heavy burdens for patent holders:-- An applicant does not want the patentapplication to be published earlier than usual.
-- A super-early examination is requested.
(Senior Reseacher: Kazuaki WATANABE)● 6 ●IIP Bulletin 2010