Japan's Industry-Academic-Govemment Collaboration and Technology Transfer Practices: A Comparison with United States Practices
In recent years, Japan has been a keen observer of the industry-academic-government relationships in other areas of the world, and particularly those in the United States (U.S.). Since the late 1990’s, this author has met with hundreds of representatives from Japan’s universities, government agencies, and industry, as these people seek to better understand the practices in the U.S., and of Stanford University in particular.
In my area of expertise, the transfer of academic research results to industry, normally through licensing and new venture formation, Japan has made significant progress, beginning with the 1998 Law Promoting Technology Transfer from Universities to Industry. This law provided funding for approved Technology Licensing Offices (TLOs). This was followed by other laws promoting technology transfer by Japan’s universities including:
(1) 1999 Law on Special Measures for Industrial Revitalization. This law reduced patent fees for approved TLOs by 50%. There was also the establishment of the Small and Medium-Size Business Innovation Research System, which is referred to as the Japanese SBIR system. This law is also referred to as the Japanese Bayh/Dole law as it contains many of the U.S. Bayh/Dole provisions, but the provisions were optional until a directive from MEXT in 2003 made them mandatory as of April 1, 2004 (the date the status of Japan’s 87 National Universities changed);
(2) 2000 Law to Strengthen Industrial Technology. This law permitted paid consulting for professors under certain conditions and permitted them to also hold management positions in companies when commercializing their inventions. It also allowed approved TLOs to use National University facilities free of charge;
(3) 2002 Revisions to existing laws that would allow university-based venture companies to use National University facilities and encouraged the start-up activities of approved TLOs; and
(4) the 2003 Basic Law on Intellectual Property to change the legal status of the National Universities.
Just as the Association of University Technology Managers (AUTM) in the U.S. has been active in presenting the needs of U.S. universities to government policy makers from its formation in 1974, and influenced the creation of such legislation as Public Law 96-517 (known as the Bayh/Dole Law), so is the Japan Association for University Intellectual Property and Technology Management (JAUIPTM) doing the same in Japan. Originally formed in September 2000 as the Japan TLO Association, the initial members were representatives from each of the approved TLOs and representatives from the Ministry of Economy, Trade and Industry (METI) and Ministry of Education, Culture, Sports, Science and Technology (MEXT). I believe JAUIPTM, which has been largely a university-government group, would benefit by having significant representation from both industry and the service providers to the technology transfer profession. Of AUTM’s over 3,000 members, almost 50% are from industry and the service provider sector, and they provide valuable support and inputs to AUTM’s activities. The “Networking Fair” at AUTM’s Annual Meeting is a place where university, industry, and government people interact and form valuable networks.
The role of the Central Government has been quite different in Japan vs. the U.S. The U.S. does not have a “Ministry of Education” or similar government agency that can exert direct control over the policies and activities of universities. Thus, U.S. universities have a great deal of independence in determining teaching, research, and public service agendas. The recent (April 1, 2004) change in status of the National Universities in Japan was a positive step in granting such universities greater independence. It also provides for clarification of ownership rights for university inventions. Without such clarity, experience in the U.S. is that industry is reluctant to invest in university research, as it may not be able to use the results from the research they sponsor. The March and June 2004 articles by Robert Kneller, Professor at the University of Tokyo, in les Nouvelles, the Journal of the Licensing Executives Society, provide a comprehensive review of this change in status and what may come from it with regard to technology transfer practices.
According to these articles, in many or most cases, there is only four weeks from the disclosure of an invention to the decision as to whether the university will claim ownership. I believe this is a serious limitation. In the U.S., under the Bayh/Dole provisions, for government-sponsored inventions, the decision period to claim ownership is the earlier of two years from disclosure or 60 days prior to a patent bar date. This extended period of time is important because many university inventions are not developed to the stage were effective evaluation can be made when they are first disclosed. The ability to “table” inventions to obtain confirming research results, or to create a prototype that shows the invention actually works before committing to the costs of patenting, appears not to be available to many Japanese universities. Further, in the U.S., there is a one year grace period from first public disclosure to file a patent application, and if further time is needed, the U.S. has a very low cost provisional patent application. Thus, at very little cost, the time before committing to an expensive regular patent application can be extended to two years from first public disclosure.
Some other ways in which the process in Japan differs from that in the U.S. include the following:
(1) Inventors in Japanese universities, in most cases, retain more influence over the disposition of their inventions than is typically the case in the U.S. Inventors may have the right to declare their invention has no commercial value and thus have it pass into the public domain, or they may declare the invention was not work-related and thus they should retain ownership rights;
(2) The MEXT policies on ownership of intellectual property rights appear to only apply to faculty, and does not extend to graduate students and Post Docs. In the U.S., any person receiving financial support in conjunction with research projects (including students and Post Docs) is normally required to sign an agreement that they will assign invention ownership rights to the university. This is important as most inventions include a professor and one or more graduate students/Post Docs as the co-inventors, and most have outside sponsorship that requires the delivery of certain rights to the sponsor. If the student or Post Doc co-inventor did not have an obligation to assign, then the university might not be able to deliver on its contractual obligations. However, the Japanese universities can require that any student who uses university facilities in making an invention must assign ownership rights to the university, and I assume most if not all are likely to require this;
(3) Many National Universities still retain a contractual relationship with a separate for-profit TLO organization, and it is this separate organization that handles licensing and the return of royalty income to the source university, normally as a “gift”. Under U.S. tax law, royalties paid to universities are exempt from be classified as “unrelated business income” and thus are not subject to income taxes.
In summary, just as the U.S. Bayh/Dole removed barriers and allowed for an efficient and effective technology transfer process in U.S. universities, the recent laws and policy changes in Japan have also removed many such barriers. And just as it took many years in the U.S. following the 1980 Bayh/Dole law to build the infrastructure of trained and experienced technology transfer professionals required to produce impressive economic benefits, it likely will take many years in Japan. An example is the Stanford University Office of Technology Licensing, established in 1969. For the period 1969 — 1980, total cumulative royalty income for the period was $4 million. For the period 1981-1990, the cumulative royalty income was $40 million. For the period 1991 — 2000, total royalty income was $400 million. However the important point is that a great majority of the $400 million can be traced to inventions disclosed in the 1970s.
“Guide to Technology Licensing Organizations (TLOs) in Japan” FY2003, Industry-University Cooperation Division, Ministry of Economy, Trade and Industry
Kneller, Robert, “Transformation of Japan’s National Universities into Administratively Independent Corporations”, les Nouvelles, March 2004, pp. 1-5
Kneller, Robert, “The New Japanese System of Technology Transfer: Concerns related to the Role of University IP Centers”, les Nouvelles, June 2004, pp. 69-72
Kneller, Robert, “University-industry cooperation and technology transfer in Japan compared with the US: another reason for Japan’s economic malaise?”, University of Pennsylvania Journal of International Law 2003 24 (2)
Nishizawa, Akio, “The New Management System of Intellectual Property Rights in Japanese National Universities”, Innovation Matters, August 15, 2003 Vol. 1, Issue 6 (www.techingroup.com)
“Status of Japanese Technology Transfer”, A workshop held at the AUTM Annual Meeting in February 2003 with the following presentations: