Jack Ellis

Continuing a trend manifested over the past decade, the number of patent applications submitted to the Japan Patent Office (JPO) fell again in 2016, as businesses reappraise the role that Japanese assets play in their IP portfolios. However, the decrease was significantly smaller than in previous years – suggesting that filing rates may be levelling out, for now.

According to the latest annual status report from the JPO, total of 318,381 applications were filed with the agency in 2016, including 59,893 applications submitted through the international Patent Cooperation Treaty (PCT) route that designated Japan.

This represents a small drop from the 318,721 applications submitted in 2015; and when PCT filings are left out of the equation, direct applications to the JPO actually increased slightly last year, from 258,290 in 2015 to 258,488.

Compared to the -2.23% year-on-year decrease in filings seen between 2014 and 2015 – and the overall -19.66% drop over the past decade – last year’s figures look like a relatively positive development from the JPO’s perspective.

Nevertheless, it remains the case that would-be applicants are filing for fewer and fewer Japanese patents each year. While acknowledging that application numbers continue to  fall, the status report suggests that the “ratio of the number of patent registrations to the number of patent applications (patent registration rate) tends to be increasing”, and that this shows that applicants “have become more strictly selective in filing patent applications, further indicating that IP strategies of companies… are steadily shifting from quantity to quality”. The JPO registered 203,087 patents last year – an increase of 7.3% on 2015’s figure, but still significantly lower than the 227,142 grants in 2014 and the record 277,079 in 2013.

Speaking to IAM in September last year just after he had been appointed JPO commissioner, Yoshinori Komiya said that the declining domestic application rate should be considered in the context of changing strategic priorities for Japanese companies. “With the globalisation of Japanese companies, overseas patent filings generated in Japan are increasing, including applications through the PCT,” he said. “Another factor is the ballooning expenses incurred by these companies… because of these costs, only truly critical applications will be pursued. So companies are becoming more selective and focused when it comes to obtaining patents, and that makes the overall environment more sound.”

The ongoing shake-up in corporate IP strategies in Japan has been a consistent theme here at IAM over the past few years. As foreign competition has risen and economic progress has become increasingly uncertain, Japanese companies have seen their budgets and their market share shrink. It is not a surprise that the reining in and rationalisation of their precipitous patent filing activities – as well as a closer look at how their existing portfolios might be better leveraged to create additional value – are now top of the Japanese corporate agenda.

This perhaps explains why the JPO is receiving fewer patent applications each year. But beyond this, it may also simply be the case that many businesses – both Japanese and foreign – are seeing less value in obtaining Japanese patents.

For one thing, it appears that Japanese courts continue to be unattractive dispute resolution forums for enforcing patents, in many respects. Data suggests that the competent courts in the country drop as many as three-quarters of infringement complaints they receive from patentees. Moreover, they nullify well over half of asserted patents when asked to rule on validity. Compounding this is the fact that available damages remain particularly low. Without the enforcement value to back them up, it is perhaps easy to see why many businesses decide to reduce their spend on Japanese patents – or overlook them altogether.

Some commentators suggest that these high rejection and invalidity rates have their roots as much in the issuance of patents of questionable quality by the JPO, as in an inherently patentee-unfriendly attitude on the part of the courts. The JPO still ranks highly among users for the quality of its output and its services; though perhaps the impact of its push in recent years to lower filing fees and speed up examination timeframes should be more closely looked at.

The table below shows the top 10 companies in terms of Japanese patent grants last year, as revealed in the JPO’s annual status report. All are Japanese companies.

2016 rank

2015 rank

Company

2016 grants

2015 grants

1

5

Panasonic

4,276

2,445

2

2

Canon

4,095

3,717

3

3

Mitsubishi Electric

4,042

3,364

4

1

Toyota

3,717

4,614

5

6

Fujitsu

2,399

2,339

6

9

Denso

2,374

2,024

7

7

Seiko Epson

2,281

2,264

8

10

Honda

2,144

1,934

9

8

Ricoh

2,142

2,053

10

20

JFE Steel

1,787

1,206