Monday, January 9, 2017

ROI for Patent Licensing, Japan Lagging far behind the Netherlands and Israel

Nikkei shows interesting figures on the relationship between (i) research expense and the number of patent applications and (ii) research expense and patent royalty income, which are generated based on the "Results of the Survey of Research and Development" and the OECD "Main Science and Technology Indicators", and comments that the characteristics of Japanese inventive faculty is "quantity over quality", indicating that Japan lagging far behind the Netherlands and Israel in the ratio of patent royalty to research investment, while Japan wins the No. 1 position in the number of international patent applications generated by a hundred million dollar research expense. 

The right figure shows the relationship between research expense and patent royalty income. The Y axis indicates the annual patent royalty income (in a hundred million dollars) received from overseas, and the X axis indicates the ratio of patent royalty to research investment. The Netherlands has roughly the same annual patent royalty income as Japan, but as for the ratio of patent royalty to research investment, that of the Netherlands is more than 160%, while that of Japan is less than 20%. That of Israel is also high, i.e. about 110%. It is certain that Japan is lagging far behind these two countries, but it appears reasonable to regard these two countries as exceptional. 

Both the Netherlands and Israel are small countries, smaller than Japan. The number of patent applications is also smaller than Japan. As for the technical field of patent applications, the Netherlands and Israel file the most in the field of "Medical technology", while Japan files the most in the field of "electrical machinery, apparatus, energy". Investing most in medical technology may be one of reasons that the ROI of the Netherlands and Israel is high. It might be interesting to research these two countries. 

Electrical machinery, apparatus, energy
Medical technology
Medical technology
Computer technology
Electrical machinery, apparatus, energy
Computer technology
Computer technology
Digital communication
Basic materials chemistry

Source: WIPO statistic database - patent publication by technology in 2015

Wednesday, January 4, 2017

Japan Earned 33.8B Dollars from Technology Exports in 2015

According to the Survey of Research and Development, Japan earned 3.9498 trillion yen (33.8B dollars in 117 yen / dollar) from technology exports in 2015, which includes patent licensing and supply of technical know-how. This is a increase of 7.9% from the previous year, four (4) consecutive years since 2012 and showed the highest figure.

It should be noted that 74.7% of the export is traded between a parent company and its subsidiaries. So, some observers criticize that this is not real royalty revenue, and that earning from non-affiliated companies is an issue in the future.    

This is probably due to the fact that many Japanese manufacturing companies have taken a strategy of "vertical integration", i.e. complete their business operations within their group companies, and have delayed in a transition to "horizontal specialization". Actually, this is often explained as the reason why Japanese manufacturing companies have been weakened in the globalizing world. So, when they go forward into "horizontal specialization", they will make more the royalty revenue from non-affiliated companies, and hopefully improve their international competitiveness.

Results of the Survey of Research and Development