CASRIP Newsletter - Winter 1998, Volume 5, Issue 1
University Technology Transfer in Japan
Following the example set by the United States Government with the Bayh-Dole Act of 1980, Japanese universities have begun implementing plans for improving technology transfer between government-funded university research and the private sector.
In the United States, patent rights for inventions developed by universities under U.S. government funding are granted to the university, subject to certain limitations. This has proven to be a boon for U.S. universities, which have capitalized on this government grant by establishing offices to effectuate the licensing of these inventions to the private sector. According to a report released by the Association of University Technology Managers, schools in the U.S. and Canada earned $592 million from the royalties and licenses emerging from this technology transfer in 1996.
Unlike the U.S., Japan does not have a system in which the rights to university-developed inventions stay with the university. Rather, the determination of the proper owner of invention rights involves a lengthy decision-making process conducted by a university invention committee. For the most part, the invention rights remain with the individual inventor.
The Ministry of Education (Monbusho) sets the rules for ownership determination. Generally, the ownership of inventions is placed with the nation of Japan if the inventions are the outcomes of government funding or the use of government equipment. An additional requirement is that the research must have been directed toward developing practical applications. This determination is to be conducted by a university invention committee, with the ultimate decision left with the university president. The precise mechanism for determining whether ownership remains with the nation or with the inventor is unclear. To further add to this somewhat opaque process is the fact that if the research funding was provided from private sources and the university inventor believes that ownership does not belong to the nation, there is no requirement that the inventor make a report to the university. The inventor is then free to develop or market the invention as he or she sees fit.
After an invention is reported to the invention committee, if the committee decides that the country will assume ownership of the invention, management of that technology will be handled by the Japan Society for the Promotion of Science (JSPS). Although JSPS has the right to license the technology, when it does grant licenses, it generally grants only nonexclusive ones. In practice, nonexclusive licenses are usually a less attractive option for private industry.
As a result, the current system has failed to yield a significant number of invention disclosures from university researchers. In 1995, only 435 inventions were reported to Japanese universities, and the country took rights to only 45 of them. What often occurs is that the inventor will bypass the university disclosure system and directly market the invention to private companies.
A new law was recently proposed to create technology transfer offices to better facilitate the transfer of inventions developed through nationally funded university research. As plans currently stand, the precise mechanism for how these liaison offices will operate remains unclear. However, one such office is currently under development at the Research Center for Advanced Science and Technology, an interdisciplinary research institute at the University of Tokyo. The design of this technology transfer office differs in a number of ways from its American counterparts.
The focus of much attention has been on how the office will evaluate and market new technologies brought to it by researchers. Unlike the U.S., where technology transfer is relatively common, a large market does not exist in Japan for the buying and selling of new technologies. Companies have traditionally developed and maintained their research in-house, so they lack both experience in negotiating for technologies developed outside and expertise in evaluating the promise of new inventions. In addition, there is a lack of individuals with sufficient knowledge of and connections within the industry to be able to market undeveloped technologies to private companies. For this reason, the primary role of this technology transfer office is to serve as "liaison office," making the connection between the university inventor and private industry.
Another problem being addressed is the method of funding the liaison office. It is expected that for at least the first few years of operation, the office will not generate any profits. Therefore, various options for obtaining funding have been considered, with current emphasis on attracting private funds to support the liaison office. Venture capital firms specializing in specific technical areas are being sought out to provide these funds, in exchange for which the firms will receive assignments of technologies in those areas and will then attempt to license them independently. Although the number of venture capital firms in Japan is only a fraction of the number operating in the United States, these firms have the advantage of a pre-existing staff of experts within certain fields of technology, thus easing the burden on the liaison office.
Unlike some U.S. technology transfer offices which have implemented policies giving licensing preference to domestic companies, the University of Tokyo office intends to choose its licensees without discriminating between Japanese and foreign companies. This is in part due to the acknowledgment that Japanese companies have less experience in dealing with technology transfer than those in the U.S., thus forcing a greater reliance, at least initially, on foreign licensees.
Given the considerable profits earned by the technology transfer offices at some major U.S. universities, it is interesting to note that planners of the Japanese technology transfer offices consider profitability for the university to be of secondary importance. A greater emphasis is placed on educating those in the university and in industry of the value of university research. Unlike the start-up savvy researchers at Stanford University, researchers in Japan are not so well informed regarding the marketability of their intellectual property. As a consequence, the full commercial potential of university research is believed to remain largely untapped. Similarly, private industry in Japan is unaware of the advantages of licensing promising new technologies from universities. By providing a more efficient liaison between these two sectors, both groups will see significant benefit, thus elevating the circumstances of the nation as a whole.
Since these efforts are still being developed, empirical evidence of the effectiveness of the Japanese approach remains to be seen. However, given the significant resources devoted toward making this project a success, industry and academia in the U.S. would be well advised to closely monitor its progress.