Sunday, May 28, 2017

Japan Promotes Investment in Intangible Assets

Investment in intangible assets such as patents, know-how, data etc. is becoming important to support corporate innovation.

However, in Japan, investment in tangible assets such as factory equipment is still larger than investment in intangible assets, as shown in the figure below prepared by the government, while, in the US, investment in intangible assets is larger than investment in tangible assets.
Therefore, the government is considering measures to promote investment in intangible assets. Here are the examples:
• Develop guidelines for assessment of investment in intangible assets in companies.
• Prepare incentives, assistance measures and environmental improvement to promote the investment in intangible assets.
• Develop guidelines for information disclosure for investors to assess the value of companies.


However, a reason for the smaller investment in intangible assets in Japan may be just because the expense which should be considered as the investment in intangible assets by the nature of things is not calculated. In fact, the calculation methods of GDP was revised last year to include research and development expenditure in "investment", and then nominal GDP increased nearly JPY20 trillion (approximately $177 billion). It is also reported that the government will conduct study to include intellectual property investment and sharing economy in the calculation of GDP. Patent acquisition may be officially considered as "investment" in the future.

It is no doubt that investing in intangible assets is important for corporate innovation. Japanese companies, at least large companies, have made substantial investment in R&D expenditure and generation of intellectual properties. For example, the ratio of R&D expenditures to GDP in Japan has remained at the 3% level since 2000, that is higher than the US and Germany at the high 2% level. Also, Japan is still a major country in the number of PCT filing, as shown in the below figure prepared by the JPO.

What we should know is that, for intangible assets, it is more important how to use (or monetize) them. They would make a big difference in the return on the investment depending on their utilization.

Saturday, May 13, 2017

JPO Releases Action Plan for AI-based Operations

Recently, many people are worrying that their jobs may be replaced by AI or robot in the future. The JPO examiners may be not the exception.
On April 27th, the Japan Patent Office released their activities in 2016 and action plan for the use of AI in the JPO.

In 2016, the JPO demonstrated the usefulness of the AI-based telephone answering system. The percentage that a correct answer is included in the top five candidates presented by the system for a question has reached 80%. In 2017, the JPO will expand the coverage and improve the accuracy, intending to provide trial or full-scale introduction within approximately two or three years.

The status of other major operations are as follows.

Research and development phase
The JPO will consider the cost effectiveness and the pros and cons of introduction over three years for the following operations.

  • Designation of patent classification
  • Patent prior art search
  • Designation of design classification

No research and development case found yet
The JPO will pay close attention to the progress of AI technology and continue to discuss for the following operations.

  • Understanding and finding of a claimed invention
  • Decision  on whether to grant or reject a patent application
  • Prior design search
  • Decision on whether to grant or reject a design application
  • Trademark examination

Considering the status above, it will take some time to start AI-based operations in the JPO. When I visited a Chinese company in Beijing in April, they gave me a quick demo of a design search system which culls similar designs from a database. The SIPO may start AI-based operation ahead of the JPO, at least in prior design search.  

Saturday, May 6, 2017

Mitsubishi UFJ Morgan Stanley Securities Partners with an IP Analytics Company

On April 27, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. announced partnership with an intellectual property analytics company, VALUENEX Inc. to improve their research reports by merging Mitsubishi UFJ's corporate/ market analysis with VALUENEX's technical trend analysis based on IP-related big data.

In the background, they are facing changes in the business environment. For examples, a stock analyst, as a general rule, has become prohibited from inquiring on undisclosed financial information, according to the guidelines prepared by the Japan Securities Dealers Association (JSDA), to assure fair trade. (About the guidelines, you can find a detailed explanation by Deloitte here. Also, you can find a related article regarding Mitsubishi UFJ here.)

There is a research report (available here in Japanese) on correlation between business performance and ownership of patents, which was released by the Japan Patent Office (JPO) in March 2016. It doesn't prove causation, but it is interesting.

According to the report, it was found that, in the manufacturing industry, patent owning companies are 6.9% higher in sales growth rate and 30% higher in profit growth rate than patent non-owning companies.

Also, there is a difference in the effect of ownership of patents between large enterprises and SMEs. For SMEs, both the number of owned patents and the number of patents implemented by themselves have a positive influence on their business performance, while the strategy of protecting know-how as a trade secret possibly have a negative effect.

On the other hand, for large enterprises, it was found that the number of patent applications has a negative influence, while the number of patents implementation by themselves has a positive influence. It suggests that strategic decisions on which technology should be patented and which technology should be protected as know-how are more important for large enterprises who file a large number of patent applications.

Considering the results of this research, patent analysis may be more effective for SMEs. Also, in the Japanese stock markets for new companies such as JASDAQ, stock price of a company sometimes skyrockets when it gets a patent. By checking the status of examination at the JPO, you may be able to get information of obtaining a patent prior to the company's press release, and make money in a shorter time.