Japanese large companies have been stealing SMEs’ intellectual property. This issue was brought up in a working group discussing the improvement of business conditions for SMEs or subcontracting companies, as reported in our previous article. Then, Japan Fair Trade Commission (JFTC) conducted surveys on the handling intellectual property in the transactions in manufacturing industry, and published the report on June 14 2019.

JFTC had responses from 15,875 manufacturers, and received reports of 726 incidents. The reported incidents include:

• Forcing the disclosure of know-how, to manufacture in-house or make other cheaper companies manufacture the product using such know-how.
• Doing joint research only by name, in which only a subcontracting company works and forced to transfer IP for free.

Interestingly, the reported incidents include those in transactions between large companies. Most of incidents given by large companies are related to ownership of IP rights, as below:

• Permission required to file a patent application
• One-sided IP transfer

In fact, I have reviewed contracts which include similar languages above. However, what I was a little surprised is that such incidents were reported from large companies. Because they should have many in-house contract professionals. So, I’m just wondering if they could not negotiate under their business relationships.

Closing a deal at hand is important. However, it is more important to use our imagination to examine the risk of accepting such unfavourable terms for future businesses.

JFTC said they will deal with such violations strictly. Anyway, we should build a society where we respect the intellectual property of other people, and people who created valuable intellectual property get rewarded.

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