JIN-186 -- Unused Patents Could Prove a Boon for Japanese Companies

J@pan Inc Magazine Presents:
T H E J @ P A N I N C N E W S L E T T E R
Commentary on the Week's Business and Technology News

Issue No. 186
Thursday, June 27, 2002


++ Viewpoint: Unused Patents Could Prove a Boon for Japanese Companies

++ Noteworthy News
- Asian High-Tech Sector in the Early Stages of Recovery: S&P
- Kansai Bank Wants Its Customers to Play Bingo
- Sony, Toyota Swap Workers

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++ Viewpoint: Unused Patents Could Prove a Boon for Japanese Companies

Ryoichi Shichijo, vice president of online patent-information provider
yet2.com Asia, has a story to share about the patent business in
Japan. One of his Japanese clients had an unused patent to sell. The
company asked yet2.com to write the specifications and sell it on the
Web. After the information was posted, a person inside the same
company said his division wanted to use the patent.

Finding a useful patent is like finding a treasure at a flea market.
Documentation is often unclear but unused patents have the potential
of creating profits if found and used properly.

"Big US corporations use only 10 percent of their patents," says
Shichijo. The patent rush in the US came during the 1990s as the
concept of intangible property spread among big corporations. IBM, for
example, acquired about half of all its patents during that one
decade. Japanese corporations slowly followed the same path. Big
manufacturers such as Canon followed the Western example in rushing to
patent its technologies before somebody else did. But increasing R&D
costs were putting pressure on profitability. "Corporations (in the US
and Europe) used to think of R&D expenditures as a cost, but now they
are talking about it in terms of return on investment," he says.

Corporations -- Western or Japanese -- used to be too proud
to use technologies that were not invented in-house. Or they
considered the idea of selling their technologies to be akin
to leaking their deep secrets. But with the changing climate,
they now don't mind buying technologies found elsewhere as a
way to cut down R&D costs. They've also found that licensing
their patents can be a lucrative business. IBM, for example,
made as much as $15 billion out of intellectual property
during 2001, about 100 times more than 15 years ago. Japan
is behind the US as far as intellectual property issues are
concerned, but changes are on the way.

NEC, for example, announced recently that the company will
focus more on licensing out its technologies and patents.
According to the Japanese media, the company currently makes
20-40 billion yen by licensing technology and patents; it
aims to increase the revenue to 50 billion yen within three years.

NEC has established a division of 75 people specializing in
licensing. Hitachi is also thinking about licensing out
intellectual property that it is not using in order to
increase efficiency.

Shichijo believed that things are happening slowly but steadily.
In the case of the US and Europe, buyers of patents "proudly found
elsewhere," as they are called, are mostly big corporations or
venture businesses. In Japan, though, even small- and medium-size
businesses are willing to use inventions of big name corporations.
And sometimes companies find a use for a patent that is totally
different from what the patent was originally planned for.

Japan may be a sinking ship economically, but many believe that its
technologies are still viable. Some foreign companies are said to be
watching closely what Japanese corporations could offer.

-- Sumie Kawakami


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** Asian High-Tech Sector in the Early Stages of Recovery: S&P

Extract: US credit rating agency Standard & Poor's recently released a
report that said Asia's high-technology sector is now in the early
stages of recovery. The report, entitled "Asia High-Technology
Industry Review," says companies have enough confidence that demand is
improving to start increasing capital spending. One of the clearest
signs of recovery has been in the semiconductor foundry sector, S&P
says, with Taiwan Semiconductor Manufacturing, the world's largest
foundry, posting a sharp 77.8 percent year-on-year revenue rise in May
2002. But the report warns that recovery is still modest. Cellphone
sales are up only slightly on 2001, while data networking, computing
and chip industries are a long way from robust expansion, the agency

As for Japan, S&P notes that manufacturers are increasingly forming
strategic alliances to increase efficiency. NEC and Hitachi's DRAM
joint venture and the tie-up between Toshiba and Matsushita Electric
Industrial on liquid crystal display products are examples of this
trend. The report concludes that "2002 will be a year of slow recovery
for the industry, with more sustainable growth probably occurring in

Standard & Poor's Web site and email contact


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** Kansai Bank Wants Its Customers to Play Bingo

Extract: Kansai Bank says that the company will start to offer a Bingo
game on its Web site where winners will get preferential interest rates
for loans and savings. The new service will start in July. Savers with
a one-year deposit will get an extra 0.20 percent each time they win
the game.



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++ Sony, Toyota Swap Workers

Extract: Japanese corporations are known for their inflexibility in
exchanging personnel, but two of the nation's top firms have swapped
mid-career engineers, according to the Asahi Shimbun newspaper.

In the firm's first exchange of this type outside its own industry,
Sony transferred a 36-year-old software engineer for car stereos and
navigation systems to Toyota on June 1, Asahi writes. In April of last
year, Toyota transferred a 38-year-old engineer to Sony, where he was
assigned to work on product planning for the MiniDisc Walkman. The
exchange program, which was proposed by Toyota, grew out of monthly
meetings between the two firms from 1996 through 2001, the newspaper

The number is very limited, but the exchange program is still a novelty
for Japanese corporations. The companies say they hope the exchange
program will one day lead to joint product development.


SUBSCRIBERS: 5,714 as of June 27, 2002

Written by Sumie Kawakami (sumie@japaninc.com)

Edited by J@pan Inc staff (editors@japaninc.com)


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