NEC Corp, which has more patents than any other Japanese company, set up a special office to market its inventions of electronics products and processes, targeting a fivefold increase in sales of intellectual property.
NEC, Japan's biggest PC maker, targets annual revenue of Japanese yen 50 billion (US$375 million) from the new business in three years, up from Japanese yen 10 billion, said company spokesman Sage Sakai. He said the office would have about 75 staff. Many Japanese companies have lagged overseas rivals in recouping funding on research while their reluctance to sell intellectual property rights has led to infringements resulting in costly lawsuits.
"This is a right move for Japanese companies which haven't utilized patent rights efficiently and more companies will follow suit," said Michitaka Kato, who oversees Japanese yen 20 billion in assets at Japan Investment Trust Management Co, including NEC shares.
"Raising funds by selling unused patent rights will encourage workers in companies' research and development divisions."
International Business Machines Corp, the largest patent holder, earned US$1.54 billion from selling patents and royalty assets last year. Only about one-third of the approximately one million patents in Japan, the world's No.2 patent holder after the US, have been used for commercial purposes, reports have said.
Pioneer Corp, one of the few Japanese companies to capitalize on its know-how, has bolstered flagging earnings by licensing its optical disk technology to DVD player manufacturers, company spokeswoman Kayoko Tanaka said.
The Tokyo-based company set up a unit in the US in 1989 to market its research and patent revenue generated four-fifths of operating profit in the nine months ended December, she said.
Operating profit from patents at the maker of DVD players and plasma displays was Japanese yen 13.6 billion in the period, out of a total Japanese yen 17.1 billion, down 21 percent.
NEC's move comes as the government of Prime Minister Junichiro Koizumi is looking for ways to protect Japanese companies' investment in intellectual property and allow companies to boost returns. The Ministry of Economy, Trade and Industry is considering allowing companies to securitize patent rights for sale to investors, the Nihon Keizai newspaper said Saturday.
More than half of the Japanese companies doing business in China have had their products illegally copied by local rivals, METI said in a report Friday.
Making patents more available via licensing will increase cooperation between rival companies, reducing the need for costly lawsuits to pursue patent claims.
NEC in September filed a lawsuit in the US accusing Motorola Inc, the No. 1 pager maker, of infringing its patents relating to pager products.
In January, NEC settled a patent dispute with InterDigital Communications Corp for US$53 million and entered a licensing agreement, the US company said.
NEC, which has 68,509 patents in Japan, will sell patents or grant licenses to fledging companies in Asia to manufacture mobile phones and telecommunications equipment, spokesman Sakai said, confirming a Nihon Keizai report.
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