JPO Postponing Alternative Dispute Resolution Plans with IoT Difficulties

In 2017, the JPO had been trying to institute a system of Alternative Dispute Resolution (ADR) to force patent owners and prospective licensees to reach positive resolution when negotiations failed. However, the JPO realized that it should hold off on instituting its plans, at least for the time being.

ADR seemed to be a way to remove barriers to business development. On further reflection, though, the JPO recognized that complex, modern-day products and services that require many, diverse patents to function (standard essential patents, or SEPs)—as with “smart” IoT (Internet of Things) products–makes it unlikely that satisfactory resolutions could be reached with a standardized rubric for arbitration and fees.

Whereas in the past patent licensees were in fields related to those of the patent owners, that is much less so in the world of IoT. The telecommunications and IT industries invent the technologies that are desirable in other fields, such as automobile manufacturers or service industries. The JPO notes that holders of those IT-related SEPs may valuate their inventions at even hundreds of times as much as the corporations needing to use those inventions in their products do. Meanwhile, pre-production negotiating for diverse SEPs needed in the product can be cost-prohibitive for manufacturers.

While not moving ahead immediately with ADR, the JPO will keep considering how to make policies that fit well with global procedures, make win-win results for patent owners and licensees, and enable involved parties to forecast developments in their enterprises better.

International investors, patent applicants, and technology users will want to keep an eye on how the JPO resolves these issues and (hopefully) improves their playing field. Of course, if working on international technology transfer and licensing with Japan, they will need to continue to use effective cross-cultural negotiation and consult with experienced local agents.

Writer: Josiah T. Momose.
(The information provided on this website is for informational purposes only and is not intended as legal advice. For questions or inquiries, please contact us for more information.)

Sources (in Japanese)

JPO report, November 2017.
November 27, 2017 Nikkan Kogyo Shimbun article. Issued in Newswitch on December 3, 2017.

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