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This article was originally published in The Gray Sheet

Executive Summary

JAPAN PATENT REVIEW TIME IS RELATED TO COMMERCIAL VALUE OF TECHNOLOGY for which a patent is being sought, the General Accounting Office concludes in a report released July 13. The average patent pendency in Japan is six-to-seven years, compared to 19 months in the U.S., and the time for review appears to be especially long for technology perceived to have a high commercial value, the report suggests. "Many [U.S.] company officials told us that it is particularly difficult to obtain patents on broad, commercially valuable technologies in Japan or on those that involve important new technologies," the report states. "More than four times as many companies viewed their ability to obtain a patent for a pioneering invention as a problem in Japan as compared with that in Europe and the U.S." Problems most frequently cited in obtaining Japanese patents were "the length of time involved, the cost, the scope of the patent protection granted, and the difficulty in obtaining patents for pioneering inventions," GAO said. For instance, the report notes the Japanese Patent Office's requirement of "working examples" that are "supposed to demonstrate a one-to-one correspondence with the claims" made in the patent application. "According to a patent counsel at a U.S. biotechnology firm," the report continues, "this requirement [of working examples] makes it virtually impossible for pioneering inventions in the chemical, biotechnology and pharmaceutical areas to be adequately protected." Entitled "U.S. Companies' Patent Experience in Japan," the report was based on a survey of top patent-holding U.S. firms whose filing activities include the chemical, biotechnology and semi-conductor fields. Of the 300 firms responding, 13.4% said that the industries they were "primarily involved" with included biomedical devices/equipment, 32.9% "chemical and allied products," 21.7% pharmaceutical biotechnology, and 31% the semiconductor field. The GAO team was overseen by Director of International Trade, Finance, and Competitiveness Allan Mendelowitz. Requested by Sens. Jay Rockefeller (D-W.Va.), Dennis DeConcini (D-Ariz.) and former Texas Democratic Sen. Lloyd Bentsen, the study found that 39% of the 300 responding companies were "dissatisfied" with their overall patent experience in Japan. By comparison, just 13% of responding companies were dissatisfied with their U.S. patent experience, and only 3% were dissatisfied with their European experience. Although the report clearly points to problems within the Japanese patent system, it notes that the patent practices of U.S. companies may be responsible for some of their problems. The report also acknowledges that the Japanese Patent Office (JPO) recently has adopted "some measures to improve the patent system." In a statement released July 13, Rockefeller discounted these steps, saying "little improvement has been made...While the [JPO] hires a few more examiners each year, the problems persist. The delays are still far too long, and the backlog is actually growing." Rockefeller aide Bill Reinsch said at a July 13 press conference that JPO practices will be discussed at a Senate Finance Committee hearing within "the next couple of weeks." Among the subjects to be considered at the hearing will be S 148, the International Protection of Patent Rights Act, introduced by Rockefeller earlier this year, Reinsch said. The bill requires the U.S. Trade Representative to identify foreign countries that "deny adequate substantive standards" for patent protection, and work to eliminate such problems. The U.S. also is involved in two sets of multilateral negotiations on the issue of intellectual property rights, through the Uruguay Round of the General Agreement on Tariffs and Trade, and the World Intellectual Property Organization (WIPO), an agency of the United Nations. WIPO has proposed a treaty to harmonize international patent procedures, and the GAO report predicts the treaty would address many of the concerns raised by U.S. companies. About two-thirds of the companies responding to the GAO survey indicated their support for harmonization, despite the fact that such a move would also alter U.S. patent procedures by changing the inventorship requirement from "first to invent" to "first to file" and mandate the publication of all patent applications after 18-24 months. At a July 13 hearing before the House Ways and Means trade subcommittee, U.S. Trade Representative Mickey Kantor indicated that non-tariff barriers to trade in Japan are more "significant" than tariffs. "The relative absence of tariff barriers is less significant than the bewildering array of non-tariff barriers that make success in the Japanese market so hard to come by," Kantor said. The U.S. and many of its trading partners have found that "products and services which are coveted around the world [often] receive negligible success in Japan." However, Kantor noted, "Japan is a more open economy now than it was five or 10 years ago...[and] is in fact the second leading recipient of U.S. exports, after Canada." In addition, he said, U.S. trade negotiators during the July 7-9 economic summit in Tokyo agreed with their Japanese counterparts "on a new framework for negotiations" to correct "sectorial and structural issues that have hampered our exports, and those of other nations, to Japan." At the Tokyo summit, the group of seven industrialized nations agreed to eliminate all tariffs "and non-tariff measures" in eight market sectors, including medical devices and pharmaceuticals ("The Gray Sheet" July 12, p. 5). On July 12, GATT negotiations began in Geneva over the elimination of tariff and non-tariff barriers. The negotiations, which have a Dec. 15 deadline for completion, also will address harmonization of intellectual property protection and trade affecting service industries, such as financial services.

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