|
|
|
Map of Asia |
Email this citationCIAO DATE: 1/00
Protection of Intellectual Property Rights in Japan
Working Paper
April 1996
I. Introduction
Protection of Intellectual Property Rights (IPRs) serves two objectives: encouragement of innovative activities and proper dissemination of existing knowledge.
Since laws relating to IPRs—the patent law, the copyright law, and others—give the monopoly of the product of the inventive and creative activity to those who invent or create it, the first and the second objective can often conflict with each other. In other words, excessive protection of IPRs could prevent the diffusion of useful knowledge already existing on the earth.
At an earlier stage of economic development, countries are technological followers of more advanced countries. Diffusion of existing knowledge is more important then. At a certain stage of development, countries start encouraging the creative activities to enlarge its own technological frontier.
Japan has a long history of importing knowledge, technology, institutions, culture, and even language. The Taika reform was a systematic introduction of the Chinese legal system. The Japanese language consists of Chinese characters (differently pronounced from Chinese) and phonetic symbols that are simplified forms of Chinese characters. During the Meiji restoration, western technology, institutions, and sciences were introduced from abroad. The high growth era of the 1960s was possible with the introduction of foreign technology, (Morishima, 1982).
The Japanese have taken the attitude that knowledge or culture is more precious because it came by a boat from overseas “Hakurai.” Therefore it is not surprising that Japan’s IPRs related legal system emphasized the diffusion of foreign knowledge rather than creating its own. Already, the Japanese system was characterized as diffusion rather than helping innovation.
Section II summarizes the basic features of Japan’s Patent Law in comparison with that of the United States and discuss some controversial aspects that are raised in U.S.–Japan negotiations. In Section III, I will briefly consider other IPRs protection in Japan, including the treatment of the copyright neighboring rights.
Section IV is a discussion of the international aspects of IPRs protection. Recent economic literature strongly suggests that the extension of rigorous protection of IPRs of the U.S. type to the rest of the world may not be a desirable way for the world as well as developing countries. We have to search for a proper trade–off between the incentive for innovation and the dissemination of knowledge. The Conclusion evaluates the attitude towards IPRs issues of the Japanese government. It is hard to know if the Japanese Government has a consistent value system for the future of Japan’s IPRs laws and if it has a well defined principle for international negotiations in related issues. In general, one might say the following. While in the United States the political or lobbying pressures from lawyers (and accordingly from consumers) are strong, in Japan the political or lobbying pressures from industrial sectors (producers) are strong.
II. Main Features of Japan’s Patent System
The Patent System is probably the most important pillar of IPRs protection in any country. Thus, let us begin with Japan’s Patent System. Japan’s old Patent Law was legislated in 1921, and protected the fruit of innovation activities while giving sufficient allowance for the use of existing knowledge (Nakayama, 1993).
For example, during the early phase of economic development, compulsory licensing is often required for a patent holder. The demand for diffusion is then very acute. In fact, during the course of Japan’s economic development, until 1938 a patent could expire if the patent holder did not use the patent. Gradually, this requirement was relaxed. At present, a potential user can request the patent holder to license a necessary patent, and if the negotiation between them does not reach a conclusion, then the potential user can ask for arbitration by the President of JPO (Article 83, Patent Law). This illustrates the relationship between economic development and IPRs protection.
The present Patent Law, which was legislated in 1959, has been subject to many amendments that serve to meet international demand as well as domestic necessities. Therefore, the present patent law contains various articles that are required by the international community. In this sense, Japan’s patent law has been substantially “harmonized” to the world standard. Still, it has the following features that are distinct from patent systems of other countries and that of the United States. The Reader will notice that the Japanese system tends to emphasize the diffusion or the effective use of knowledge rather than the protection of the creators of knowledge.
1. The “First to File” Principle other than the “First to Invent” Principle
As is well known, the “first to file” principle concerning who has the priority to an invention is a rather universal feature. Only the United States and the Philippines hold the “first to invent” principle, and they are considered to be outliers.
Indeed, the “first to invent” principle allows investors who do not intend or cannot afford to file to enjoy the fruit of their efforts. This may explain the fact that the ratio of individual inventors unaffiliated to companies is much higher in the United States than in Japan, and the encouragement of venture capital at small scale firms or individual inventors should be seriously considered in Japan. During 1969 and into September of 1994, the ratio of individual patentees in the total patentees was 19.0 per cent in the United States, 8.5 per cent in France, 8.0 per cent in England, 6.0 per cent in Germany and 1.8 per cent in Japan.
However, while the “first to file” principle leaves the matter of priority to the record of filing a patent, the “first to invent” makes the verification process called “interference” more complicated and costly. Efforts and resources used for the legal process cannot be ignored. For the sake of transparency and uniformity at the international level, it seems legitimate for the Japanese government to request that the United States government adopt the “first to file” principle.
2. Patent Duration
Until recently, the duration of patents in Japan could be shorter than twenty years, which is the minimum duration agreed to at the Trade–Related Aspects of Intellectual Property Rights (TRIPs). In the Amendment to the patent law of 1994, the law was changed to guarantee at least 20 years after the application for the patent (Patent Law: Article 33). The United States gained the concession that the expiration date could be any time beyond 20 years after the application. However, the United States agreed with Japan in the IPRs Working Group in the Japan–U.S. Comprehensive Negotiation that they would change the duration of patents 20 years from their first filing date.
This change will resolve the issue of duration and the problem of discrimination against foreigners by Article 104 of the U.S. patent law. It will also help to eliminate the “submarine” patent in the United States. The submarine patent refers to the case that already well–known technology becomes suddenly patented by somebody whose application is taking a long time to be examined due to a continuation of applications. The old U.S. patent law could not prevent the submarine patent because it counted the duration of time after the patent was granted.
Incidentally, Japan obtained this concession from the U.S. in exchange for agreeing to accept patent applications in the English language. This revision was welcomed by the Japanese as well because the foreign application’s content could be described more accurately (Kumagai, 1995 p.26).
3. Breadth of Claims
It is often claimed that Japan’s Patent Law does not protect a sufficient breadth of a patent claim. Under Article 70, the range of invention protected by a patent is determined by the description in the application for a patent. Foreigners protested that the breadth of technology protected by Japan’s Patent Law was too narrow.
Already a few amendments have been done to make the breadth of claims flexible. A single item application system is now changed to a multi–item system, and many inventions that are mutually closely related are allowed to be on a single application. The amendments were made in accordance with the Patent Cooperation Treaty (PCT).
On the other hand, foreigners emphasize the principle of equivalence. Patented technology should be protected from new technology that uses essentially the same method, exerts essentially the same function, realizes essentially the same result, or technology which is obvious for specialists to achieve the same result (Kumagai, 1995). From this principle, the Japanese system, however modified, may still to be rather restrictive about the breadth of the claim. 2 This is an area where economic analysis can contribute to decide the breadth of claims and economic efficiency. First, in order to protect the inventor by the same amount, the product of breadth and length of protection should be the same. If the product of breadth and length is given, the question becomes whether a patent should be protected for a short period and with a substantial breadth of claim. This is a rather subtle economic problem.
Consider the following hypothetical case. Suppose a person invented a tennis racket larger than the conventional size and this invention was patentable. How large should be the protection of this idea? One way is to protect the narrow range of the large racket as patentable. The other way is to protect a substantially wide range of racket as patentable. Also, there are two ways to keep the product of length and breadth constant; protect a restricted range of ideas for a long time and protect a broader range of ideas for a short time.
The first way will encourage inventing activities of a similar kind. Other people will try to invent a racket that is slightly larger or slightly smaller than the range of width that was protected by the patent. On the other hand, the second way will discourage inventing activities that are a small variation of the larger racket idea. Instead, it will encourage inventing activities aimed for a more essential technological change, for example, improvement in material and physical resilience.
In the actual world, the patent’s length of duration is not adjustable, and the above story is only partially valid. However, from this example one can deduce that the Japanese system encourages the modification and the improvement in the application of a given technology. On the other hand, it encourages basic inventions less.
One could argue both ways for the desirable direction of Japan’s patent policy. Broadening the basis of claims may result in producing more original research in Japan. Alternatively, it may erode the strength of Japan’s industries that has for a long time exploited the catching up position by borrowing technologies abroad and adding many small adaptations and improvements.
4. Objection before the Establishment of a Patent
Japanese law has allowed outsiders to protest against a patent that was being examined. This was another discouraging element for innovative activities. Under U.S. pressure, this system was discontinued in the 1994 Amendment of the Patent Law. Also, Article 92 of the Patent Law allows government’s arbitration of the conflict when a patent (or utility model) holder requires the use of another patent (or utility model). The Director (Minister) of the Patent Office can declare the mandatory license of the latter patent. Again, this is pro–diffusion device. The Japanese government agreed with the United States on comprehensive negotiation to refrain from using this arbitration.
5. Length of Examination
The United States and other countries complain that the time required for examination is too long in Japan. Japan was in the process of administrative reform, and the number of examiners did not increase with the number of applications. In 1989, on average, an examination lasted more than 3 years from time of request to the end. It was reduced to 28 months in 1993. In the United States the corresponding figure is about 18 months. The United States insists that the relevant time length is not from the request of examination, but from the application to the end of examination.
6. “Paper–less” Applications
The Japan Patent Office (JPO) is proud of its computer on line system to process patent application and information exchange. JPO started accepting electronic applications at the end of 1990, sending applications and other forms in July 1993, and supplying patent data on line in July 1993. This “paper–less” system is ahead in the world. We hope that this will hasten the examination process.
Finally, the requests from the American side is not limited to the content of substantive law. Procedures matter in legal disputes. In particular, American lawyers complain about the absence of the discovery process in Japan. Without the discovery process it is hard to start litigation on the IPRs disputes. This complaint appears in cases of product liability as well.
We must note in both cases, however, that a trade–off exists between the protection of rights and the economy of dispute resolution costs, among which the cost associated with the discovery is not negligible.
III. On Japan’s Intellectual Property Rights System other than Patent
In addition to the Patent Law, Japan’s industrial property right system consists of the Utility Model (Petty Patent) Law, the Registered Design Law, and the Registered Trade Mark Law. There is also the Copyright Law for publication and artistic products and the Unfair Competition Prevention Law.
Copyright Law: Features of Japan’s Copyright Law is similar to other countries, based on the Bern Convention. However, copyright issues became serious international, or the U.S.–Japan, issue with respect to the software and the neighboring right of copyright, particularly related to products of music performances. Therefore, I will discuss in this section mainly those aspects that are related to current IPRs disputes.
Software protection is a crucial issue in U.S.–Japan negotiations. Software can be easily reproduced and involves a large amount of economic value. Also, understanding software requires technical knowledge. Software cannot be examined by examiners so easily. In this respect, protection of software is more like that of copyright. On the other hand, in order to stimulate technical advance that uses existing software, the length of copyright protection (in Japan, 50 years) may be too long. Also, there is a tendency for software’s aims and objective to become very similar (Nakayama, 1988). Therefore, too strict protection of software may result in discouragement against the development of similar software.
From these considerations, the protection of software in Japan created heated discussions. The main issue was to decide which laws should protect software, Patent Law or Copyright Law. In 1982, Tokyo District Court (Dec.6) made the decision that a computer program is subject to a copyright.
Those who advocated the handling of software by copyright law maintained that the Copyright Law of Japan has the objective to protect industries. On the other hand, those who advocate the handling of software by the patent law, and other special legislation, argued that software protection by the Copyright Law of Japan is too long—a person who lived 50 years after the drafting of a program can enjoy 100 years of protection—that there is no arbitration system about the use of a copyrighted software, and that a well defined legislation, on the use of software is necessary because the new development of software relies heavily on the old software.
At the end, a Copyright Law amendment passed the Diet in June, 1985. Since then software has been protected by the Copyright Law. The tug of war between the Cultural Agency, which was for the Copyright Law, and MITI, which was for a combination of new laws and the Patent Law, was won by the former. Behind this outcome was strong pressure from abroad, particularly from the U.S. The U.S. did not like MITI’s plan for a short protection period of 15 years. It regarded the arbitration system as a means of virtually confiscating American know–how of software and considered that it would benefit by establishing a precedent in Japan to protect software with the Copyright Law. Usually, I welcome “foreign pressures” that work for the benefit of consumers. In this case I cannot simply admire this foreign pressure.
Now the neighboring rights of video and audio media is also the center of attention in the U.S.–Japan negotiations. The Japanese government is reluctant to change the protection of neighboring rights to copyright retroactive prior to January 1, 1971, when the neighboring right was first introduced to Japan. According to my information source in Japan, the alleged reason that the Japanese government did not comply to the demand by the U.S. government was that the U.S. as well as other governments had approved the attitude of Japan. It is the U.S., according my news source, that broke the promise. Now, Japan is ready to amend the copyright law along the request of the U.S. and other countries.
I do not wish to be a juror to ascertain what exactly took place. Here I also find pressure from the entertainment industries in the U.S. and their intention to establish a advantageous precedent in Japan before going into Hong Kong and China. In a broader perspective, however, this dispute also reflects the contrast between the legalistic attitude of the U.S. that insists on making its legal principle prevail the world over and the complacent attitude of Japan on the value of creative arts and performance.
Unfair Competition Prevention Law, which had been originally legislated in 1934, was amended in 1993. This revision is made partly as a response to the international trend. At the same time, Japan’s new law contains various stipulations, such as the conditions under which injunctions the stolen secret can be made. It is taken as a model of unfair competition prevention legislation. Therefore the conflict with respect to the Unfair Competition Prevention Law is hardly seen in the substantive law. However, the enforcement of trade secrets is hard in a Japanese court where the court is open to the public except under abnormal circumstances like the violation of public standards of decency.
Patent protection takes the form that technological knowledge is protected while it is made public as the content of a patent. On the other hand, the Unfair Competition Prevention Law is to protect knowledge that cannot be open to the public.
Counterfeit products are usually protected by the Registered Trade Mark and Design Law. Many deceiving devices can be monitored by the Unfair Competition Prevention Law.
IV. International Attitude
In developing countries respect of the creation of new knowledge is not sufficient. The intellectual atmosphere is changing, but even in Japan foreign knowledge is expected more. In some East Asian countries I have had the personal experience of being taken to shops that sold counterfeit products as part of a sightseeing tour.
I detest this tendency. Still, I would like to emphasize that there is always a trade–off between promoting the production of knowledge and the effective use of existing technology. It is neither fair nor desirable to extend the legal stipulation of a most advanced country like the United States to countries with different stages of economic development.
Japan shares basic interests with the U.S. and seems to be moving implicitly in that direction. But, Japan should be aware of the present situation of economic analysis and also careful of the unqualified application of legalistic ideas to overprotect the IPRs.
In the TRIPs negotiations in the Uruguay Round of GATT and other negotiations, an implicit assumption seems to exist. That is, the solid protection of intellectual property rights (IPRs) was an unquestionable policy goal. According to this view, insufficient protection of IPRs would reduce innovative activities and thereby harm not only the welfare of advanced countries but also that of developing countries, because they could not benefit from the advance of technology. Moreover, licensing of new technology and FDI to developing nations is affected negatively by insufficient protection of IPRs. However, recent economic analysis tells somewhat different stories from the traditional view, or what advanced countries, particularly the U.S., maintain.
Chin and Grossman (1990) shows that in their model of symmetric duopoly that for the late–comer country there is an advantage for not honoring IPRs. In their model, a single Northern firm has access to invention activity, and a single Southern firm does not have access to invention activity. They produce the same good for an integrated world market. Naturally, the interest of the North and that of the South contradict one another. At first, the Southern country can benefit from alleviating the protection of IPRs of foreign technology. Only when the South has a high share of the production of the commodity and the effect of encouraged foreign technological advance becomes beneficial to the South, does the protection of IPRs pay off. For the North, IPR protection is always beneficial. The direction of the world welfare is ambiguous depending on many factors.
Deardorff (1992) develops another static model and also concludes that extending IPR protection geographically to a wider area of the world may result in not only welfare reduction of developing countries but also welfare reduction of the world. In these models, incentive effects of IPR protection on innovations encountered by the increasing cost of the increased monopolistic power of patent holders.
In a dynamic model of innovation and trade, Helpman (1993) develops still further the analysis of the benefits and costs of tighter IPR enforcement in an endogenous growth model where innovation takes place in the North while the South imitates the technologies that have been invented in the North. Generally, the South loses from tighter IPR protection because the terms of trade deteriorate due to higher prices of Northern commodities. Initial acceleration of inventive activities is not sufficient to compensate for the eventual decline of welfare for the South. Neither does the existence of FDI change this result.
In the absence of FDI, the North benefits from tighter IPR protection when the rate of imitation is high. When the rate of imitation is low, the North may lose by the reduction in product availability due to tighter IPR protection. However, in the presence of FDI, tighter IPR protection benefits the North when the rate of imitation is low because the terms–of–trade effect becomes weak and the income effect dominates.
Incidentally, one of the “Special” Trade Act Article 301’s targets were practices related to patent law in Japan, particularly the delay in the approval process. Also, Article 337 of the U.S. Tariff Act 1930 is invoked unilaterally against foreign imports from a country whose unfair practices concerning intellectual property rights was recognized. (The Executive Committee of GATT ruled that this practice is in violation of Article 3, Section 4, of GATT.) Aoki and Prusa (1993) developed an economic analysis of this issue and concluded that Article 337 may harm American economic welfare by overprotecting the monopoly of producers and deterring the innovation.
V. Parallel Imports and the Exhaustion of Patent Rights
There is an interesting legal case concerning the effect of patents on the injunction of parallel imports. In other words, the question is “Is the patent right exhausted internationally by selling the product that incorporates a patent?” I would like to explain this because it encompasses the legal, economic, and international aspects at the same time.
As background for the following discussions, we note that the price level in Japan is much higher than in the United States and higher than in Europe in spite of the fact that tariffs and quotas are non–existent except for a very few commodities like rice. The prices of many imported “brand” products are often maintained by their exclusive importers. Parallel imports are one way of breaking these monopolistic practices.
Before May 1995, court decisions stipulated that parallel imports could be suspended due to the violation of patent rights. In conformity with the principle of independence of patent rights of countries as prescribed in the Paris Convention, the act of importing any product without the patentee’s prior agreement, regardless of whether they are “genuine” products is considered to constitute patent right violation.
In March 1995, the Tokyo High Court on the BBS Aluminum Wheel Case [Appeal to the Tokyo High Court for Injunction of Patent Right Infringement, etc.; No.3272 of 1994(Ne)] ruled that the domestic exhaustion of the patent right be admitted on the consideration of the balance between patentees’ interests and the public interests. The court ruled, for the first time in Japan, that parallel imports of patented products do not violate the patent right because international exhaustion of the patent right should be recognized as their domestic exhaustion. The case concerned about parallel importers of a German made automobile wheels (hubcaps) who demanded that imports and sales cease. The first decision at the Tokyo District Court granted the producer BBS’s request to halt imports and sales of parallel importers. [The case is being appealed in the Supreme Court, and the decision is not yet conclusive.]
This decision indicates a new direction on the parallel import case and can be an epoch making one. The majority of domestic legal opinions seem to be in favor of the decision. International, legal opinions are, however, divided. The Japanese government is presumably torn between the pressure to allow parallel imports for opening the domestic market and the objective to protect the intellectual property rights properly. Indeed, even within the MITI (Ministry of International Trade and Industry) itself, a subtle difference of opinions towards the High Court decision seems to exist between those who are in the position to protect the patent right, that is, officials in the Japan Patent Office (JPO) 3 and those who are engaging to lower trade barriers, that is, officials in the Import Promotion Division.
In the European Union, exhaustion of a patent is recognized for the product produced within the Union. A product sold in a European country can be imported to another European country without concern about its patent. Products produced outside the Union are considered not to be subject to the international exhaustion of the patent. American scholars such as Harold C. Wegner (George Washington University) expressed a strong opposition against this decision on the grounds that it affects adversely the research and development activities in highly technological sectors like pharmaceutical and chemical industries.
Economic analysis can cast some light on this problem. First, consider the question of what is the benefit of the parallel import. Allowing the parallel import does not always enhance the combined economic welfare of the exporting and importing countries, that is, the world economic welfare. Schmalensee (19 ), Varian (1985), and Hausman & MacKie–Mason (1988) have shown that if the quantity of total sales increases or remains the same after allowing a parallel import, then the allowance of parallel import is beneficial to the world. Also, if the restriction of a parallel import reduces the total sales of the producer, then the restriction is not desirable. Therefore, in order to judge the effectiveness of a parallel import, the quantity sold before and after a parallel import should be compared. Only when the parallel import increases the sale of the producer, the argument for the exhaustion of patent right will be grounded. In the case of the linear demand curve, the amount of sale is constant, therefore the benefit of parallel import seems to be positive.
When it is found that the allowance of parallel import is preferable for the world welfare, one has to compare this gain with the possible loss associated with the incentive loss due to the recognition of international exhaustion.
Although a long period of time has passed since the problem of a patent and innovation attracted economists attention (for an earlier research see Nordhaus, 1969) empirical findings on the effectiveness of patent protection on innovative activities are scarce, and most of them are not very conclusive. Levin, et.al. (1987) and Mansfield (1986) all recognize some benefits from innovation but its quantification seems to be difficult. On the other hand, most of us believe that patent protection will help innovating activities at any rate. This belief lies at the bottom of economic justification for the patent law. Without this belief, the rationale for patent protection would be reduced to an appeal to the fairness argument that the originator of new ideas and technology should be entitled to the fruit of his/her hard work.
Attention should be paid to two extreme cases. One case is where the patent right is not used as an essential means for protecting innovative activities, but as a pretext to keep monopoly power of the producers and the designated distributor in the foreign market. Once in Japan, the parallel import of the “Nordika” ski boots were suspended at Customs due to protest by the designated distributor. The reason was the patent, registered in Japan, on the shoe’s fastening mechanism. This can be regarded as the measure to protect monopoly power generated by a “brand,” rather than as a measure to protect innovative activities.
Since international exhaustion of registered trade marks after the sale is established, the designated importer appeals to the patent that was not considered to exhaust internationally. It seems that in this kind of case we may allow the international exhaustion of a patent. Since allowing parallel imports, static economic welfare is enhanced, and the effect on innovative activities seems to be minimal. In this case, the logic of the above mentioned Tokyo high court decision seems to be exactly right.
The following scenario depicts another extreme. Suppose a pharmaceutical company developed a new drug for a serious disease. It exports the drug to a market in a developing country. Because of the low income level, the drug sold there at a low price. A high price in the home country is needed to support the low price abroad. Then, a parallel import of the drug comes back to the home country from abroad like a boomerang. In this case, the suspension of a parallel import may be justified for the following reasons. First, the existence of a parallel import may necessitate the pharmaceutical company’s sale of the drug in the developing country at a much higher price. Accordingly, the amount of total sale to the world may decline. Second, since inventing activities in the pharmaceutical field is crucially important, the protection of the patent should be thorough. The nature of this protection is different from the protection of a “brand.”
Thus, I would like to propose the following conditions on which the international exhaustion of a patent should not be allowed:
1a. The allowance of parallel import reduces the world total sales of a product to which the patent is attached. Or,
1b. The prohibition of parallel import increases the world total sales of a product. And,
2. The technology that is protected by the patent is basic to human kind, and inventions in the field should be strongly protected.
Otherwise, one should recognize the international exhaustion of a patent.
Condition (1a) or (1b) is a test of static welfare gain. If the parent company’s sales stay at the same level or increases after the parallel import, that is the sign of the static welfare gain to the consumers and producers. Condition (2) is the gain of the long–run benefit of protecting the patent right by denying its international exhaustion. The second extreme case explained above will satisfy (1a) or (1b) and (2).
VI. Concluding Remarks
Instead of summarizing the content of this paper, let me conclude it by discussing the attitude of the Japanese government regarding the future of IPRs protection and its international ramifications.
What is the basic attitude of the Japanese government to the issues of IPRs protection? I find it difficult to answer this question clearly. Japan’s attitude seems to have been generally case by case adjustments of ongoing domestic problems and case by case reactions to international pressures. Case by case approaches defy the principles. The possible division of opinions on the issue of international exhaustion of a patent, even within the government, may indicate the absence of principles.
When Japan was mainly a borrower of western technology, the facility to make use of existing technology was its priority. Now that Japan has reached the vicinity of technological frontiers, its emphasis is shifting to the position of a country that exports technology. Since Japan still utilizes a large amount of imported technology, Japan’s position naturally maintains a degree of ambiguity. As still a borrower of technology, know–how, software, and audio–video measure, Japan is to emphasize the diffusion; as an emerging creator of technology, Japan is to emphasize the exclusive protection of rights.
This explains Japan’s attitude towards IPRs problems in developing countries. Japan is eager and effective to extend training personnel for patent examinations in Asian countries. Japan does not seem to be as articulate as the U.S. to insist on the legislation and the enforcement of IPRs protection in developing countries.
Finally, Japan is an “incorporated” nation—not only in the sense that as a nation Japan has a corporate structure that synthesizes the public and private sector, but also in the sense that individual family life is dominated by schedules and priorities in a “Kaisha” (corporation) culture where the main wage earner works. Accordingly, the political or lobbying influence of industrial sectors on politicians and bureaucrats is dominant. The content and enforcement of IPRs laws have thus reflected and will reflect the interests of industrial sectors rather than consumers and individual investors.
The United States, on the other hand, is a “settle (everything) in court” nation, so to speak. The legal culture’s dominance is seen not only in the rigorous protection of IPRs but also in the procedural law concerning discovery. The political pressure or lobbying power is strong from lawyers. Accordingly, the interest of consumers and individual investors is well protected, but often at the cost of large expenditures for conflict resolution.
Thus, the difference between America’s attitude and the Japanese attitude stems from these two sources. First, Americans generally emphasize encouragement of innovative activities relatively more than the dissemination of existing knowledge, and the Japanese vice versa, though recently approaching the U.S. position. Second, the United States has a legal structure that facilitates the process of protecting IPRs, and Japan appeals to the administrative processes rather than legal processes in solving the conflict between inventors and users.
References
Aoki, R. and T. J. Prusa, 1993, “International Standards for Intellectual Property and R and D Incentives,” Journal of International Economics, 35, pp. 251–274.
Chin, J. and G. Grossman, 1990, “Intellectual Property Rights and the North–South Trade,” in Jones and Krueger eds. (1990).
Deardorff, A. V., 1992, “Welfare Effects of Global Paten Protection,” Economica, 59, pp. 35–51.
Hamada, K., 1985, “Lessons from the Macroeconomic Performance of the Japanese Economy,” in Inflation and Unemployment: Theory, Experience and Policy Making, V. Argy and J. Nevile, eds., George Alland & Uwin Ltd., pp. 181–199.
Hamada, K. and T. Honda, 1992, “Engine of the Rising Sun: Productivity Growth in Postwar Japan,” in Rivista di Politica Economica, No. 12, December, pp. 397–438.
Helpman, E., 1993, Foreign Direct Investment of Japanese Firms, Investment and Disinvestment in Asia (in Japanese, Nihon Kigyo no Kaigai Chokusetsu Toshi), University of Tokyo Press, Tokyo.
Hausman, J.A. and J.K. MacKie–Mason, 1988, “Price Discrimination and Patent Policy,” RAND Journal of Economics, Vol. 19, No. 2, Summer, pp. 253–265.
Institute of Intellectual Property, 1994, Report on the Basic Issues Concerning Economic Effect of Intellectual Property (summary).
Kumagai, Ken–ichi, 1995, Chikujo Kaisetsu Kaisei Tokkyo Ho (The Amended Patent Law), Tokyo, Yuhikaku.
Levin, R. C., A. K. Klevorick, R. R. Nelson and S. G. Winter, 1987, “Appropriating the Returns from Industrial R & D,” Brookings Papers on Economic Activity 3 (Special Issue on Microeconomics), pp. 783–820.
Mansfield, E., 1986, “Patents and Innovation: An Empirical Study,” Management Science, February, pp. 173–181.
Morishima, Michio, 1982, Why Has Japan “Succeeded”?, Cambridge University Press.
Murakami, Masahiro, 1990, Tokkyo, Raisensu no Nichibei Hikaku (The Japan–U.S. Comparison of Patent and License), Tokyo, Kobundo.
Nakayama, Nobuhiro, 1898, Sofutowuea no hoteki Hogo (Legal Protection of Software), Tokyo, Yuhikaku.
Nakayama, Nobuhiro, 1993, Kogyo Shoyukenho (Jo) (Industrial Property Law I), Tokyo, Kobundo.
Nakajima, Takanobu, 1996, “Issues on Japan’s Intellectual Product,” Keio University, mimeo.
Nakayama, Nobuhiro, 1995, “Heiko Yunyu to Tokkyoken Shingai (Parallel Import and Patent Infringement.” Chapter 12 of Institute of Intellectual Property ed. Chiteki Zaisan no Choryu (The Current of Intellectual Property Rights), 1995.
Niihara, Hiroaki, 1987, Kaisei Tokkyoho Kaisetsu (Introduction to the New Patent Law), Tokyo, Yuhikaku.
Nordhaus, W. D., 1969, Invention Growth, and Welfare; A Theoretical Treatment of Technological Change, MIT Press, Cambridge, Massachusetts.
Peck, M. J., 1976, “Trade in Technology: U.S.A. and Japan,” in L. G. Reynolds ed., The Economics of Technological Progress, papers presented at the U.S.–U.S.S.R. Symposium.
Varian, H. R., 1985, “Price Discrimination and Social Welfare,” American Economic Review, Vol 75, No. 4, September, pp. 870–875.
Endnotes
Note 1: I am indebted to Atsushi Kato (Daito Bunka University), Kenichi Kumagai (Kyushu University) and Minoru Tokumoto (Yale Law School) for their helpful comments. Hiroaki Niihara and Norihiro Yokoyama (both with MITI) gave me useful suggestions, but errors and opinions expressed in this paper are strictly mine. Back.
Note 2: In the Sumitomo Electric vs. Corning Glass case, the fiber cable was judged by the U.S. court that applied the equivalence principle. If it was brought to a Japanese court where the breadth of a claim is interpreted to be narrower. Back.
Note 3: JPO is virtually a part of MITI. Back.
