Local government provides strong support for patent licensing between large companies and SMEs

After having posted the article regarding the intellectual property business matching model, we received inquiries on the model. So, we would like to explain it in a little more detail here, based on the material we received from a local government.

It’s called “Kawasaki model” in Japan, because Kawasaki-City started a project under this model as a pioneer in 2007 to revitalize local industry while involving large companies successfully, and attracted attention from other local governments.

The basic concept of this model is patented technology transfer from large companies to small and medium-sized enterprises (SMEs). It could be a win-win solution for both large companies and SMEs. Large companies desire to monetize their unused patents. More than half of Japanese patents have not been utilized. On the other hand, SMEs desire seed technologies to develop their own products which should be protected by patents, aiming to move away from subcontractors.

Many large companies have been participating in this project, – e.g. Fujitsu, Toshiba, NEC, Hitachi, Nissan, Pioneer, Ajinomoto, NTT, Canon, Chugoku Electric Power, Sharp, Kyocera, Fuji Xerox, Toyota, Panasonic, Mitsui Chemical, KDDI, Honda Motor, Siemens and others. Since 2007, 29 deals have been closed and 20 new products have been created under this project, as of the end of February 2018. The success of the model depends to a large extent on strong support from the local government, i.e. Kawasaki-City.

For example, the local government provides SMEs with the following services;

    • Assist new product and business plan development
    • Provide matching opportunities with large companies  (symposium, small meeting, one-on-one)
    • Conduct contract negotiation with large companies
    • Introduce development partners, public experiment and research institute etc.
  • Help obtain public subsidy

In addition, the local government provides services for large companies. In fact, there have been not so many large companies that actively participated in this project, due to small return considering cost to identify seed technologies for SMEs. Therefore, the local government provides services for large companies, – e.g. screening seed technologies among their patents which fit for particular SMEs by conducting a search using the title and abstract of patented inventions, arranging closed meetings with selected SMEs for a particular large company, arranging one-on-one meeting when they find a good fit licensee candidate, and the like.

From their previous experiences, good fit seed technologies for SMEs are like below.

    • Clear use applications
    • Directly contributive to product development
    • Easily add value to existing products
    • Not require big effort and cost for product development and facility
    • Prototyped, or experiment data available
  • Not fit for large businesses

Certainly, there is a need for such an IP business matching model. However, it seems that this business matching model does not succeed without strong support of the local government at this moment, considering cost and information about SMEs that the local government owns. Also, it is surely beneficial to SMEs, but it may be not so attractive to large companies, considering the expected return. Maybe, we need something to turn this model into a more successful business beyond regional or social contribution.