Japanese corporates present huge opportunities for patent buyers as they look to streamline their portfolios

The Japan Patent Office (JPO) recently published an overview of the findings of its 2015 IP activity survey. Highlighting trends in IP management and value creation strategy among Japanese organisations, the survey results indicate that rights holders in the country are increasingly seeking to extract additional value from their portfolios. As they do so, they are potentially creating rich opportunities for prospective buyers on the lookout for patents.

According to the overview (available here, in Japanese), domestic patent applications have decreased steadily each year since 2005. During that year, Japanese entities filed 367,960 applications; 10 years later, annual applications had dropped to 258,836 – though a small uptick to 261,395 is projected for 2016. Between 2014 and 2016, patent application rates fell by 0.9% – though over the entire 10-year timeframe examined by the study, the slide is of a significantly greater degree. While there may be several factors at play in the patenting slowdown, anecdotal evidence would suggest that tighter corporate budgets and a push from senior management to create value are among the main explanations.

Data relating to the utilisation of patents in business activities would support this premise. The report found that just 48.9% of Japanese-issued patents held by the organisations in the survey sample are currently being “utilised” – that is, that they underpin current product and service offerings, are being licensed to third parties in return for royalty payments or are part of current cross-licensing deals with other companies – with the remaining 51.1% “unutilised”. When it comes to foreign-issued patents owned by Japanese entities, the utilisation rate is even lower, at 46%.

With so many assets lying dormant in their portfolios, Japanese companies are more likely than not paying a fortune to maintain patent rights that play little or no part in their business strategies. As such, it is no surprise to see many becoming active in the patent marketplace in an effort to sell some of these assets and generate bottom-line returns in the process. The JPO report estimates that the IP owners in its survey sample made almost ¥15.23 billion ($192.5 million) from selling patents last year, while paying out ¥12.63 billion ($118 million) to acquire patent assets from third parties. By a significant margin, the industry sector that sold the most patents by yen value was electronics manufacturing (¥9.3 billion), followed by chemical engineering (¥2.7 billion). Companies in the ICT sector spent the most on acquiring patents (¥8.78 billion).

It is safe to say that an increasing number of Japanese entities will be making their presence felt in the patent transactions market in the months and years to come. Some are turning to innovative new platforms in order to increase their chances of selling their IP assets. NEC and Sony – two of Japan’s most recognisable players in the electronics space – were among the first set of companies to sign up as vendors with IAM Market when it launched late last year. NEC currently has patent portfolios listed for sale on IAM Market covering magnetic random-access memory, on-chip transformer devices, audio and video codecs and fingerprint authentication technologies. Sony is offering portfolios relating to audio and video transcoding and powerline communication technology. Why not head over to the IAM Market portal to check out these and other listings for yourself.

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