Ensuring Intellectual Property Support for SMEs in Japan & Globally – the Differences Between SME and Corporate IP Treatment.

It seems that the landscape of IP protection in large companies, compared to that of SMEs, is completely different – this is not the case only in Japan, but globally. It is vital to understand the differences between SME and Corporate IP Treatment by the PTOs and in business.

It seems that SME IP protection is different than large companies in Japan & Globally. It is vital to understand the patent landscape, and the differences between SME and Corporate IP Treatment – not only by the PTOs, but also by industry.

For example, I was in charge of patent cases for a global automobile company at the patent firm I once belonged to. The company applies for about 6,000 patents every year. Therefore, in effect, in considering each patent application, it is basically worth 1/6000 to the client. Furthermore, only about one-third of the applications are actually requested for examination and granted rights without filing the request for examination.

On the other hand, regarding small and medium-sized enterprises (SMEs), filing patents is a vitally important matter, related to an inventor’s vision such as “I want to go out to the world with this one patent.” 

Therefore, each application’s worth to an SME, in contrast to that of a large company, is almost 1/1, 100%, and “all in” so to speak.  The weighty significance of an SMEs’ “wishes relating to that one case” is incomparable to that of large companies. As a result, with regard to the intellectual property rights of SMEs, the development of their world is completely different from that of large enterprises. In a nutshell, everything is an important project, so to speak, a “life-threatening” project. 

This is all connected to our office mission and perspective regarding SMEs.  As we say “On The IP Battlefield… We fight for our clients at every stage of IP protection.

Furthermore, for large companies, the technology of inventions is very deep, so most of them are inventions related to world-class advanced technology. Since PTO examiners will  also recognize that it is an invention of a large and famous company, and thus start the examination just by looking at the applicant’s name and, in a sense, with a “positive prejudice for the invention level” especially on the inventive step. This “prejudice” can also influence positive decisions.

On the other hand, in the case of small companies, the funds and manpower are so small and incomparable to those of a large company, so inventions that are born from independent inventors and SMEs are not as complicated as those of large companies. 

Therefore, in handling SME patent cases, the approach must be “how to effectively register simple techniques and how to exercise rights strongly”, and as a result, the skills of a patent attorney, especially regarding inventive step, come into play. 

In addition, Japanese SMEs are extremely competitive, and many dispute cases occur after patents are granted. This is also in contrast to the case of large companies, where conflict cases rarely surface in Japanese society. Even if an infringing situation occurs between large Japanese companies, ie. conflicts of patents between companies, the underwater negotiations between the IP Departments often result in cross-licensing or settlement payments. This is basically based on the “Japanese corporate culture of avoiding fighting in court proceedings.”

As a result, when drafting claims and specifications for patent applications for large companies, patent attorneys basically do not deeply consider the possibility of dispute cases. Rather, he or she drafts claims and specifications from the viewpoint of whether it accurately expresses the high technology of the invention. Also, in the IP Departments of large corporations, which check the claims and specifications, they too tend to focus on whether the invention is described accurately or not – again, with little consideration of potential future disputes.

Here’s the rub: in contrast to the large company approach, for SMEs and individual businesses, it is essential to prepare claims and specifications that take measures to be as advantageous as possible, and specifically in the case of disputes that may occur in the future. Again, in our office, this is standard procedure – to write applications and specifications to stand up against potential disputes.

When an infringement case actually occurs, a warning letter is formally sent to the infringer, and if he does not respond, a lawsuit is often filed to fight the infringement. This is a natural consequence of the fact that the patent was obtained by an SME, and also the desire to “monopolize the market as much as possible”. Therefore, it is usually necessary to handle dispute cases, often with lawsuits. For large corporations, as noted above, this is usually not necessary.

In this way, in order to reliably meet the demands of SMEs in Japan, the skills and perspectives required for making IP applications, and handling appeals, are completely different from those required by large corporations seeking intellectual property rights. This is why we say: “Understand the differences between SME and Corporate IP Treatment.”

In conclusion, from this point of view, when trying to acquire intellectual property for foreign companies in Japan, especially for patents, foreign patent attorneys had better select a  Japanese patent attorney depending on whether the client is a large company or an SME. They should consider the Japanese Patent Attorney’s skills, experience and understanding of the unique challenges faced by SMEs. Indeed, SME IP protection is different than large companies in Japan & Globally.

By Takaaki Kimura

Managing Partner and Patent Attorney with over thirty-five years of IP law experience.