Japan's Patent System and Business Innovation: Reassessing Pro-patent Policies

TSince current Japanese patent law was enacted in 1959, it has been revised several times, mainly for the purpose of international harmonization. Recently the Japanese government stresses the importance of pro-patent policies, i.e., strengthening intellectual property right in order to stimulate business innovation and to regain international competitiveness. This paper assesses the impact of series of revisions of Japanese patent system on firm's innovation activities, by using statistical data, firm level survey data and information from interviews for IP managers in IT and pharmaceutical firms. It is found that increases in patent application in the late 1990's are attributed to a surge of IT patents, as well as pharmaceutical ones. For IT and pharmaceuticals, technology fields covered by patent protection have been gradually expanded, such as in areas of software and biotechnology. This policy change may contribute to increase in patent application. However, it is difficult to separate this system factor from other factors such as expansion of technological opportunity. Although the impact of recent pro-patent policies on firm's innovation is not so clear, it is clear that IP section inside firm becomes to play more active role in firm's innovation strategy formulation, particularly in pharmaceutical firms. Tremendous technology opportunities in IT and biotech push a firm to rely on external knowledge pools by licensing activities, and it becomes important to coordinate in-house R&D with licensing activities to tap on external technology sources. In this context, IP section involves heavily in R&D and product development process inside firm. In addition, it is found that large firms in IT and pharmaceutical industry, focuses on US patent system, which moves relatively quickly for new technology field patenting, and pay less attention to Japanese one.