PERFIL PROFESIONAL DEL CERTIFICADO DE PROFESIONALIDAD Unidad de competencia 1

Japan has a long history of protecting its IPRs. The first full-fledged patent law was formulated in 1885 in the Meiji Era when agriculture was the major industry in a resource-based economy (Flamm and Nagaoka, 2007). After industrialisation, moving to a knowledge-based economy, intellectual assets became a significant source of national growth in Japan. The revolution of information technology (IT) accelerated the reform of

IP regimes to make software and intangible assets patentable in a highly IP-protected environment, which facilitated innovative and creative activities in Japan (Wade, 2005; Arai, 2006).

The Japanese government has changed its IP regime to strongly protect IPRs by focusing on the pro-creation role since the middle of the 1990s when Japanese underwent a long economic recession (Branstetter and Ug, 2004). Through the revision of existing patent law, the legal environment has changed from a soft IP regime to a tough IP regime, while extending the scope of patentability and enforced the restriction on compulsory licensing (Arai, 2006). The prevention of infringement also has been strengthened by the reform of the private damage system and criminal sanctions. The underestimated private damage system has been changed by the inclusion of opportunity costs in estimating the lost profits to infringements (Nagaoka, 2005).

In detail, Japan’s political and legal reforms for IPRs were motivated by the Structural Impediments Initiative (1994), which is a mutual agreement for structural reform between Japan and the United States. Under this agreement, the Japanese government changed its patent system from a pre-grant opposition system to a post-grant opposition system (the post-grant re-examination), and then it was integrated into the patent invalidation trails in 2004. The pre-grant opposition system involves the delay of patent examination because it allows competitors to oppose a proposed patent before it is formally granted (Jaffe and Lerner, 2004; Nagaoka, 2005). Also, the US-Japan agreement reflected the restriction of the possibility of compulsory licensing unless for the purpose of public interests, satisfying domestic demand and correcting anti-competitive conduct and for medicine export. Many of these applications have been made by the medical, biotechnology and cable/satellite industries (Merges, 1996; Nagaoka, 2005).

In the same year, the World Trade Organization (WTO) agreement on trade-related aspects of IPRs (TRIPS) brought about a reform of IP regime; the protection covers all

inventions and discoveries, except for a specified technology field, and for no less than a period of 20 years counted from the filing date guaranteed for the protection (Flamm and Nagaoka, 2007). The Japanese government also extended the scope of patentability to computer programmes through amendment of the patent law. Software was not patentable without the combination of hardware before 1993; however, a computer-readable storage medium in 1997 and then software itself obtained product patents in 2000 (Merges, 1996; Nagaoka, 2005). Later, drugs and even DNA sequences became patentable (Arai, 2006). The change to strengthen copyright and patent protection of software contributed to the increasing proportion of contracts with patents in software licenses, from less than 1 percent of the contracts in 1990 to 22.6 percent in 1998 (Nagaoka, 2005).

Table 6.9 Top Five Countries: U.S. Patents Granted to Foreign Inventors (1990-2006)

Japan Germany Taiwan U.K. Korea

1990 19,525 7,614 732 2,789 225 1991 21,026 7,680 906 2,800 405 1992 21,925 7,309 1,001 2,425 538 1993 22,293 6,893 1,189 2,295 779 1994 22,384 6,731 1,443 2,234 943 1995 21,764 6,600 1,620 2,478 1,161 1996 23,053 6,818 1,897 2,453 1,493 1997 23,179 7,008 2,057 2,678 1,891 1998 30,840 9,095 3,100 3,464 3,259 1999 31,104 9,337 3,693 3,572 3,562 2000 31,296 10,234 4,667 3,667 3,314 2001 33,223 11,259 5,371 3,965 3,538 2002 34,858 11,280 5,431 3,843 3,786 2003 35,515 11,444 5,298 3,631 3,944 2004 35,348 10,779 5,938 3,450 4,428 2005 30,341 9,011 5,118 3,148 4,352 2006 36,807 10,005 6,360 3,585 5,908

Source: Compiled by the data from USPTO statistics.

With successful reform, Japan ranked at the top with 36,807 patents in the listings of US patents granted to foreign investors in 2006 (see Table 6.9). The recent change of IP environment with the aim of lifting the IP level to the top, first the Japanese

government has emphasised the importance of creativity and inventiveness. For these, knowledge-creating institutions, especially universities, have been restructured to actively promote IP resource exploitation, knowledge diffusion and technology transfer to industry in Japan (Wade, 2005). Second, the development of specialist human resources has been focused on the promotion of IP. To cultivate the talents equipped to deal with IP, the Japanese government encouraged universities to set up law courses related to IP in 2004 and built up two IP graduate schools in 2005 (Arai, 2006). Third, the government formulated the ‘Basic Law on IP’ (2003) to improve the creation, protection and use of intellectual assets, while establishing intellectual property headquarters to effectively set up new IP policy and coordinate among government departments and other interested parties (Arai, 2006). Finally, the Intellectual Property Plan 2005 was launched to increase international patenting, as well as protect trade secrets and diffusion of pirated copies by introducing the Patent Examination Acceleration Law and establishing the Intellectual Property High Court (Flamm and Nagaoka, 2007), which might be modeled on the U.S. Court of Appeals of the Federal Circuit. The IP High Court plays an important role in the speedy resolution of disputes through predictable decision timing and controlling the inward flow of counterfeit products to Japan (Arai, 2006). The strong IPRs of Japan are proved by reports from the Business Software Alliance of the level of business software piracy. In 2006, Japan was the third lowest country, at 25 percent, in terms of business software piracy, after New Zealand (22 percent) and the United States (21 percent) (Arai, 2006).

6.3.3 Summary and Discussion

There are successful reforms of legal and political institutions for IPRs protection responding to the level of economic development in Korea and Japan. The countries benefit from strong protection of IPRs because they have attained a certain threshold in

the process of industrialisation, which supports Lall’s (2003) argument of a positive effect of a soft IR regime (a negative effect of a tough IP regime) on national technology capabilities in the early stage of industrialisation.

Table 6.10 International Property Right Index, by Ranking, 2008

Rank Country IPRI LP PPR IPR Rank Country IPRI LP PPR IPR

1 Finland 8.7 8.9 8.5 8.6 27 Estonia 6.6 6.8 7.4 5.5

2 Netherlands 8.5 8.4 8.6 8.6 Malta 6.6 7.5 6.3 6.0

Denmark 8.5 8.6 8.3 8.6 29 Chile 6.5 6.6 7.0 6.0

4 New Zealand 8.3 8.8 8.3 7.9 Israel 6.5 6.0 6.6 7.0

Sweden 8.3 8.6 8.5 7.8 Qatar 6.5 7.0 6.8 5.6 Germany 8.3 8.3 7.9 8.7 Taiwan 6.5 5.9 7.3 6.3 Norway 8.3 8.5 8.7 7.7 33 Hungary 6.4 6.1 6.6 6.5 8 Switzerland 8.2 8.8 8.0 8.0 34 Slovakia 6.3 5.6 7.1 6.2 Australia 8.2 8.3 8.1 8.2 Cyprus 6.3 6.6 6.4 5.9 10 Austria 8.1 8.4 7.8 8.1 36 Malaysia 6.2 5.9 6.8 5.9 Iceland 8.1 8.9 8.5 6.8 37 Italy 6.1 5.6 5.9 6.8

Singapore 8.1 8.2 8.2 7.8 Rep. Czech 6.1 6.0 5.7 6.5

13 Ireland 8.0 8.1 7.9 7.8 39 Greece 6.0 5.8 6.1 6.0

14 Canada 7.9 8.3 7.5 8.0 40 Tunisia 5.9 5.7 7.1 5.0

15 United Kingdom 7.8 7.9 7.1 8.5 Jordan 5.9 5.6 6.6 5.5

United States 7.8 7.1 7.8 8.6 Lithuania 5.9 5.5 6.9 5.2

17 Japan 7.6 7.4 7.2 8.2 43 Botswana 5.8 6.7 6.4 4.1

18 Belgium 7.5 7.4 6.7 8.2 44 Bahrain 5.7 5.5 6.5 5.2

19 Hong Kong 7.3 7.8 7.8 6.2 Mauritius 5.7 6.3 6.0 4.9

20 France 7.2 7.1 6.4 8.1 46 Costa Rica 5.6 6.3 5.9 4.7

Luxembourg 7.2 8.4 5.1 7.9 Kuwait 5.6 6.3 6.9 3.7 22 Portugal 7.1 7.1 7.2 7.0 Slovenia 5.6 6.6 4.7 5.5 23 United Arab Emirates 6.9 6.6 7.7 6.4 India 5.6 4.9 6.7 5.1 24 Spain 6.8 6.1 7.1 7.3 50 Uruguay 5.5 6.5 5.2 4.9 Rep. Korea 6.8 6.3 7.3 6.8 South Africa 6.8 5.9 7.1 7.4

Note: The IPRI comprises three macroeconomic indicators: (i) legal and political environment (LP) measured by judicial independence, rule of law, political stability and control of corruption; (ii) physical property rights (PPRs) measured by protection of physical property rights, registering property and access to loans; and (iii) IPRs measured by protection of IPRs, patent protection and copyright piracy.

Source: Compiled by the data from the 2009 International Property Right Index (IPRI). http://www.internationalpropertyrightsindex.org/

Under a tough IP regime, patent laws and the court of appeals/trials systems have been also substantially changed for the expansion of patentable scopes, restrictions on compulsory licensing and stronger protection against infringement and piracy by reinforcing penalties against infringers and increasing criminal sanctions and patentees’ power to collect evidence of infringement in the countries (Flamm and Nagaoka, 2007). Several policy measures to strengthen IPRs contribute to the upsurge of domestic

patenting by inducing both local and foreign residents to conduct the dynamics of innovation, which enables Korea and Japan to make IP rich countries. A tough IP regime could attract foreign organisations to make technology licensing, join-R&D and strategic alliances with local firms and research institutes with less fear about illegal knowledge leakage, thereby facilitating the transfer and diffusion of new technologies more actively.

Table 6.10 provides country rankings for degrees of IPRs. Although both Korean and Japanese IPR scores are far higher than the mean value for the world (5.4), IP regimes for IPRs protection in the countries are relatively weak compared with those of other technologically advanced countries. However, progressive institutional reforms toward a tough regime have enabled the countries to accelerate patent registration, patented technology transfer and faster commercialisation, which might provide important implications for other countries, especially those in the transition stage, to upgrade their IP regimes.