NATIONAL SCIENCE FOUNDATION
TOKYO REGIONAL OFFICE
The National Science Foundation's (NSF) Tokyo Regional Office periodically receives and disseminates reports on research developments in Japan that are related to the Foundation's mission. It also provide occasional reports on developments in other East Asian Countries.
These reports present information for the use of NSF program officers and policy makers; they are not statements of NSF policy.
Special Scientific Report #03-03 (July 8, 2003)
The following report was prepared by Dr. William A. Blanpied, Visiting Senior Research Scholar at George Mason University, who served as Director of NSF’s Tokyo Regional Office from July 1999 through August 2002. Dr. Blanpied returned to Japan from March 16 to April 26, 2003, courtesy of a Japan Society for the Promotion of Science (JSPS) Short-Term Invitational Fellowship. The National Institute for Science and Technology Policy (NISTEP) served as his host institution during his fellowship. His report is based in part on interviews he conducted with experts in government, academia and industry, particularly in Tokyo and the Kansai region, during his visit to Japan. Dr. Blanpied can be reached at Bblanpied@aol.com.
The topic of university-industry research cooperation (or, more broadly, knowledge transfer from the academic to the industrial sector) has been of at least moderate interest to a handful of Japanese scientists and science policy watchers for some time. For example, within a year of its creation in 1932, the Japan Society for the Promotion of Science (JSPS) introduced a system of committees to organize meetings in which academic and industrial researchers in specific fields exchanged ideas. More recently, the topic was on the agenda for both the second and third US-Japan science policy seminars jointly organized by the National Science Foundation (NSF) and JSPS, which were held in August 1981 and February 1984, respectively. Japanese presentations at these seminars highlighted the historical ups and downs of university industry research cooperation, sought to explain why such cooperation had become relatively rare and why (unlike the situation in the United States) the level of formal cooperation would probably not increase appreciably [1].
Despite these and other rather bleak assessments from the 1980s, the encouragement of university-industry research cooperation in Japan has now become a salient and highly visible matter of government policy. It achieved that status as one of several key provisions of the 1st Science and Technology Basic Plan, adopted by the Japanese government in June 1996 for a period of five-years until March 31, 2001, the end of Japanese Fiscal Year (JFY) 2000. Specifically, the government committed itself to explore, “measures to facilitate university-industry research cooperation, including changes in intellectual property provisions and a relaxation of regulations governing the external activities of national university faculty.”
The overall objective of the 1st Basic Plan was to strengthen the infrastructure of the publicly-supported science and technology system in Japan, particularly its academic sector. Viewed from this perspective, it is notable that technology transfer from the academic to the industrial sector was among the key provisions of the Plan.
Japanese industry, for its part, typically did not regard research cooperation with universities as particularly advantageous. Throughout the 1970s and 1980s, the strategy adopted by Japanese technology-based companies for attaining and then maintaining a strong international competitive position was based on making incremental improvements to imported technologies. Since Japanese industry did not assign a high priority to developing indigenous technologies, it saw no need to seek potentially promising research results by working with universities. Most companies preferred to carry out whatever research they required in their corporate laboratories.
Despite these barriers, Japanese companies did not entirely ignore university research. Although direct cooperation was relatively rare, industrial firms sometimes contracted with university faculty to carry out specific projects, made cash or in-kind donations to further university research, and sent their researchers and technicians to universities for refresher courses. Additionally, companies occasionally invite university faculty to conduct research in their facilities, which were very frequently superior to those available in their universities.
In addition to these formal and transparent mechanisms for cooperation, many university and industrial researchers maintain one-on-one professional relations, relations often dating from their student days. If a particular result of research conducted by a professor appeared to have some potential commercial value, he would often pass it on to an industry colleague. In exchange, that colleague might convince his company to make a donation to the relevant university department to support the research of his counterpart and/or find positions in his company for students from his department. Since in many, perhaps a majority of cases national university faculty could not patent their inventions or obtain any monetary compensation for discoveries commercialized by industry, they lost nothing by passing on their ideas to industrial colleagues.
Although no reliable data are available, this informal, one-on-one mode of cooperation may have been the principal means for technology transfer from the Japanese academic to the industrial sector at least through the mid-1990s. Legislation enacted by the Diet in 2000 extended the range of cases for which Japanese university researchers may file for patents on their discoveries and license patented inventions to private companies. Nevertheless, the informal one-on-one mode of technology transfer probably remains important. But in addition to lacking transparency, this mode is inherently inefficient. There is no reason to believe that a company receiving a promising idea from a university professor is in the best position to develop it for commercial purposes. Indeed, available evidence indicates that most of the patents obtained by Japanese companies on ideas obtained through informal relations between company and university researchers have never developed at all (Kneller, “Intellectual Property Rights and University-Industry Technology Transfer in Japan,” NSF Tokyo Report Memorandum #99-08.). Despite these inefficiencies, until the 1990s few individuals in universities, industry, or government saw any reason to try to convert this informal mode of cooperation into a more efficient, and more transparent system for research cooperation between the Japanese academic and industrial sectors.
This situation began to change during the first years of the 1990s. US companies, which had been severely battered by their Japanese competitors during the preceding decade, managed to reorganize themselves and regain at least some of their competitive advantage. At about the same time, Japanese companies recognized that in many if not most cases, they had finally realized their decades-long goal of catching up with the West. Thenceforth, maintaining a competitive advantage would require them to draw on the results of basic research, particularly in knowledge-intensive fields such as information technology and biotechnology. Universities represented a potential source of the scientific knowledge that existing Japanese companies would require to remain competitive. Additionally, as in the United States, university research might provide the basis for new companies and even new industries. Also during the early 1990s a consensus was emerging among Japan’s scientific leadership and a handful of Diet members that a substantial reorientation of the country’s publicly-supported science and technology enterprise would have to be undertaken if it was to continue to serve the country’s economic and social goals (NSF Tokyo Report Memorandum #96-11). In particular, the infrastructure of the national university research system needed to be upgraded, and the system itself reformed so that it could become more closely integrated into national research system. The most significant result was passage of the Science and Technology Basic Law in November 1995, and adoption of the 1st Science and Technology Basic Plan in June 1996 (NSF Tokyo Report Memorandum 96-21).
The Basic Plan had promised that government would take “measures to facilitate university-industry research cooperation”. These measures were to include “changes in intellectual property provisions and a relaxation of regulations governing the external activities of national university faculty.” To this end, pieces of legislation were enacted by the Diet during the five-year period of the 1st Basic Plan. The first, enacted in 1998, authorized universities and other publicly supported research organizations to establish Technology Licensing Organizations (TLOs) to assist researchers to obtain patents on their inventions and to license those inventions to private industry. The second, enacted in 2000, legitimized external research by national university professors, provided the intent of that research was to assist them in commercializing their own inventions. At the same time, Monbusho reconfirmed a ruling from the 1970s vesting the intellectual property on inventions by national university faculty in the individual inventor rather than the university, provided the invention resulted from research funded either by the university itself or by means of a contract with a private company [2].
An interim assessment carried out early in 2000 concluded that the Basic Plan was proving to be a moderately if not completely successful in its overall goal of strengthening the infrastructure of Japan’s publicly-supported scientific facilities. In any event, in April 2001 the government adopted a 2nd Science and Technology Basic Plan for a five year period ending on March 31, 2006. Whereas the intent of the 1st Basic Plan was to strengthen the infrastructure of the publicly-supported science system, the focus of the 2nd Basic Plan was on system reform. One of its principal objectives is to, “utilize research outcomes by promoting cooperation among the academic, industrial and government research sectors.” (NSF Tokyo Office Report #00-18)
The 2nd Science and Technology Basic Plan differs from the 1st not only substantively but procedurally. During virtually the entire five year period of the 1st Plan, the government lacked any central organization to coordinate Plan-related activities of the various ministries and agencies or, indeed, to encourage the government’s operating units to create programs or take related initiatives to further Plan’s key provisions. On January 1, 2001, a Cabinet Office was created which for the first time provided the Prime Minister and his Cabinet with significant staff support, with a National Council of Science and Technology Policy (CSTP) established within the Cabinet Office. One of the responsibilities of the CSTP is to formulate and implement a coherent national science policy. The CSTP has literally taken the 2nd Plan as a set of guidelines for its activities, adopting a variety of measures intended to further its principal objectives.
It is probably true that the objective of utilizing university research outcomes has received more public attention than any other objective of the 2nd Plan. The CSTP has convened two national university-industry-government summit meetings in Tokyo (in November 2001 and 2002, respectively), several regional meetings, and a working level meeting in Kyoto in July 2002 involving 3,500 participants. Evidently the university-industry-government summits are to become annual events, since a system of awards to universities and companies which are exemplary in promoting collaboration has recently (May 2002) been created, with the awards to be presented at the summit meetings.
Relevant ministries have also created programs to stimulate research collaborations, particularly between academia and industry. For example, the Ministry of Economy, Trade and Industry (METI) is providing support to university-centered TLOs and has also initiated an Industrial Cluster Program to facilitate interactions among universities, companies, and prefectural research organizations throughout the country. The Ministry of Education, Culture, Sports, Science and Technology (MEXT) has initiated a somewhat analogous Intellectual Cluster Program.
A great deal of activity intended to transfer technology from universities to industry (as well as from government laboratories to industry) is going on throughout Japan. Some of it predates not only the 2nd but also the 1st Basic Plan. However, much of it appears to have been initiated quite recently, perhaps in response to the meetings convened by the CSTP and certainly with the partial support of MEXT and METI. In any event, it is almost certain that a considerably greater amount of technology transfer activity is underway than was the case prior to 1996 when the 1st Basic Plan was adopted. The brief sampling which follows is indicative of the wide variety of technology transfer activities underway in Japan. These can be conveniently divided into three categories: 1) direct cooperation between university and industry researchers, 2) licensing of university faculty-held patents to industry, and 3) the creation of start up or spin-off companies based on the results of university research.
As noted earlier, cooperation between Japanese universities and industry has gone on for some time, although this has been at a relatively low level. Informal, one-on-one cooperation between individual university and company researchers no doubt remains one of the dominant modes of cooperation, particularly among older researchers. Despite this, concerted and frequently quite aggressive efforts to promote formal cooperation are underway throughout the country.
The stated aim of the Osaka University Collaborative Research Center for Advanced Science and Technology (CRCAST-http://www.crcast.osaka-u.ac.jp) is to play “a key role at Osaka University for effective partnership with industry and government institutions for innovation and creation of new industries.” Established in April 1995, CRCAST was expanded and reorganized in April 2000, perhaps because by then promoting university-industry cooperation had become a visible national science policy issue. Currently the center is organized into three major sectors: (1) the Comprehensive Liaison Coordination Sector, (2) the Incubation Division of Advanced Science and Technology, and (3) the Advisory Division. As its name suggests, the first of these divisions is charged with aggressively promoting cooperative research programs between Osaka University faculty and industrial firms, including international firms. It is also responsible for establishing and maintaining information networks and organizing international conferences, workshops and seminars. CRCAST currently emphasizes research cooperation in three broad areas: nano-technology, green technology, and biotechnology. Its Steering Committee includes representatives from all of the university’s graduate schools of Science, Engineering, and Medicine, as well as several semi-autonomous institutes within the university. Notably, a majority of CRCAST’s senior staff have been drawn from industry, primarily the Sumitomo and Fujitsu Companies, each with headquarters in Osaka. The presence of such a large number of former industrial researchers in the senior ranks of a university organization is unusual in Japan.
Although many of the legal and administrative barriers that formerly placed restrictions on the external activities of national university faculty have been relaxed, bureaucratic hurdles must frequently be overcome before industrial researchers can work freely in national university laboratories. These hurdles are likely to be relaxed or, perhaps, be removed entirely after April 1, 2004, when national universities are scheduled to become independent administrative agencies. Meanwhile, several experimental organizational innovations have been initiated to make it easier for university and industry researchers to work together in the same facility. One of these is the Handai Frontier Research Center (FRC-http://www.frc.handai.com), located organizationally within Osaka University’s Faculty of Engineering. This organization was established in 2001 by means of a grant from MEXT’s Coordination Fund for Promoting Science and Technology and is currently supported by private sector investments as well. The funds from MEXT enabled the Handai FRC to hire 30 research scholars on five-year appointments, and to provide research facilities to 150 regular engineering faculty who are associated with the organization on a part time basis. Since it was established in 2001, the FRC has been supporting research under 12 strategic research themes and also reserves a portion of its budget to support pilot projects by young researchers; it is working closely with industrial and university advisers to identify promising new research themes. Spin-off companies that result from research conducted at the Handai FRC receive support both in the form of funding and expertise.
The Kyoto University International Innovation Center (IIC-http://www.iic.kyoto-u.ac.jp), established in April 2002, provides another example of an innovative organizational arrangement. Its three related objectives are: (1) to create enabling technologies for the next generation of industry, (2) foster cross disciplinary research, and (3) establish a prototype for university-industry interaction.” Kazumi Matsushige, Professor of Engineering and IIC Director, explained that the latter two, closely related objectives are somewhat unusual for national universities in Japan. To address the second objective, the ICC has identified a sizeable number of Kyoto University faculty members in a range of disciplines who are qualified-and willing-to work as members of teams with corresponding teams of industrial researchers. In the future, Prof. Matsushige hopes to recruit university researchers from outside Kyoto, including foreign researchers, as members of these teams. The IIC has a Research Initiative Department charged with promoting such cooperative activities, as well as a Research Management Department to coordinate and manage cooperative research projects. The latter department, which includes an intellectual property unit and a venture business support unit, is the largest group of its kind in any national university in Japan.
In November 2002, Kyoto University announced the creation of an Organic Electronic Materials and Devices Project as a collaborative program with five large Japanese companies: Nippon Telegraph and Telephone Company, Pioneer Corporation, Hitatchi Company, Mitsubishi Chemical Corporation, and Rohm Company, Ltd. Each of these companies is investing 50 million yen (approximately $400,000) annually into the project.
Although not intended to be primarily a center for promoting university-industry cooperation, the Kanagawa Academy of Science and Technology (KAST-http:home.ksp.or.jp/kast)), in Kawasaki City approximately 45 minutes by train from central Tokyo, does provide facilities for university and industrial researchers to work together on the same projects, and also has a reasonable track record of transferring technologies to local companies. Established in 1989, KAST has a 4 billion yen endowment and a 2 billion yen annual operating budget. Approximately 67 percent of its operating budget comes from Kanagawa Prefecture, with the remainder derived from private sector investments and central government grants. The organization currently employs 72 researchers: about half of them full time, the other part time researchers from local universities (primarily in Tokyo) and local companies. KAST supports two categories of projects. The first of these categories consists of temporary projects from three to five years in duration and devoted mainly to basic research. Projects are selected by means of a competitive, open solicitation. Special consideration is given to projects proposed by prospective team leaders less than 45 years old. The second category consists of special permanent projects which emphasize applied research and technology transfer. Occasionally temporary projects make a transition and become permanent projects.
The creation of Technology Licensing Organizations (TLO) is a recent development in Japan, the Diet having enacted legislation legalizing their establishment in association with universities only in 1998. The purpose of these organizations is to assist university faculty to apply for patents on their discoveries, then to license those inventions to industrial firms. Since national university faculty members are civil servants, government regulations preclude establishing TLOs within national universities’ organizational structure. For this reason, Japanese TLOs are typically incorporated as private, for-profit organizations which are associated with universities, and offer their services to university faculty. (Private universities are permitted to establish TLOs directly on their campuses.) According to the 1998 enabling legislation, all TLOs must be approved by both METI and MEXT. METI is providing partial funding to approved TLOs for an initial period of five years. In the United States, TLOs rarely break even financially in less than about 10 years. If this also proves true in Japan, the duration of METI’s subsidies may be increased.
At the end of JFY 2002 (March 31, 2002) there were 27 TLOs associated with Japanese universities. The oldest of these is the Center for Advanced Science and Technology Incubation (CASTI-http://www.casti.co.jp), which is associated with Tokyo University and was established in 1998. TLOs were also established at early stages at Tokyo Institute of Technology (TIT), Tohoku University and Keio University, a private institution. CASTI may be the only TLO which is making a profit or, at least, not losing money, although TIT has licensed a greater number of faculty-held patents.
The Kansai TLO (http://www.kansai-tlo.co.jp – in Japanese only), also created in 1998, is organized in a somewhat different way. Rather than being associated with a single university, it is associated with several, the most prominent being Kyoto University, Kyoto Institute of Technology and Ritsumeikan University, a private institution with a good track record of attracting industry-sponsored research. The Kansai TLO is located physically in the Kyoto Research Park (KRP-http://www.krp.co.jp), approximately 30 minutes by bus from the Kyoto University Campus. KRP is a privately owned organization which provides services to Japanese and foreign companies, including incubation facilities for new companies. The fact that the KRP was established as a private venture as early as 1988 suggests that the climate for high-technology innovation in Kyoto is decidedly positive. Shinichi Masaki, Senior Managing Director of the Kansai TLO, emphasizes that to be successful, TLOs cannot simply adopt a passive attitude and wait for university faculty with potential inventions to come knocking at their doors. In common with senior personnel at similar organizations, he spends a great deal of time on the campus of Kyoto University and other contributors to the Kansai TLO trying to convince relevant faculty members to consider patenting and licensing their inventions. Apparently he is beginning to meet with some success in this regard. After April 1, 2004, when the national universities attain the status of independent administrative agencies their faculty will no longer be civil servants. Therefore, it should be possible for national universities to create TLOs directly on campus. If that happens at Kyoto University then, according to Masaki, that would constitute a business opportunity for the Kansai TLO. There would be a natural division of labor between the two organizations, with the university TLO concentrating on patent applications, and the Kansai TLO on aggressively licensing existing faculty-held patents.
A significant distinction between US and Japanese TLOs derives from differences in the laws governing ownership of the intellectual property in the two countries. In the United States, universities own the intellectual property resulting from faculty inventions supported by public funds and hold the patents on those inventions. US universities have devised their own regulations for dividing any royalties from faculty inventions between the relevant faculty member and the university itself. TLOs have been established in US universities to apply for patents on behalf of the universities themselves, and arrange for licensing those patents. That is, the TLO is the only way for the research results of university faculty in the United States to be patented and licensed.
In contrast, in Japan the intellectual property resulting from university-based research is held either by the faculty member who made the discovery or by “the nation”, depending on the sponsorship of the research (Kneller, NSF Tokyo Report #99-08). For several years, the Japan Science and Technology Corporation (JST) has had the authority to apply for patents on all discoveries belonging to the nation. There are indications that after the national universities become independent administrative organizations, JST intends to apply for and hold patents only on those discoveries for which the relevant university faculty members decline to make such applications themselves. If so, then university faculty, rather than the universities themselves, may soon own intellectual property to all discoveries resulting from their research. If so, faculty members need not go through their university’s TLO to apply for and license patents on their discoveries, although many may find it convenient to do so. The future of Japanese TLOs is likely to be strongly influenced by how well they are able to convince individual faculty members to make use of their services. Since as noted earlier there is a strong tradition of one-on-one relations between university and industrial researchers that bypasses university administrations, it may well be that many faculty members, particularly the older ones, will chose not make use of the TLOs which are, after all, a very recent innovation!
In common with TLOs, the creation of small businesses based on the results of university research—referred to as start-up, or spin-off, or venture companies—is a recent development in Japan. Unlike the situation with the TLOs, no new legislation was required to authorize spin off companies established by university faculty. Since they rather than their universities retain intellectual property rights to their discoveries, they have the options of either licensing their inventions to an existing company, or establishing their own companies. According to METI, at the end of calendar year 2002, there were more than 500 such start-ups in Japan, all but a few of which have been created during the past five or six years [3].
Venture capital firms with the primary objective of investing in start-up companies are a relative novelty in Japan. Unlike the situation in the United States, in Japan government funds are used to assist start-ups. In particular partial support is available from both METI and MEXT. Additionally, organizations can use funds from government grants to support start-up companies indirectly. For examples, the Handai Frontier Research Center provides both financial support and management expertise to start-up companies created as a result of the research it supports. Likewise the Kanagawa Academy of Science and Technology, which is supported by both the Kanagawa Prefectural government and central government in Tokyo, has spun off six companies as a result of research projects conducted under its sponsorship. KAST provides these start –up companies with research facilities for a limited time (that is, incubation facilities) to permit them to make the transition from purely research-oriented organizations to organizations that also seek to market the results of their research.
Significant funds are now becoming available from private venture business companies as well. In particular, there has been a notable upsurge of investments in university research-based start-ups as well as biotechnology and nanotechnology firms during the past few years [4]. Additionally, for many years large, established companies and have had significant funds available for new businesses. These funds have traditionally been used to support development costs for new lines of business within the companies themselves. But increasingly, funds from these sources are also being made available to small start-up companies. For example in 1998, Sumitomo Electric Industries began to provide substantial funding and business advice to university-based start-up companies, and now supports three of them: one (Synthesis; http://www.synthesis.co.jp) created by faculty from Osaka and Kyoto Universities, one (Sixon; http://www.sixon.co.jp) by faculty from Kyoto University and Kyoto Institute of Technology, and one (Starolab; http://www.starolab.co.jp) by faculty from Tokyo University. (Although several other large Japanese companies are sharing support for Synthesis, Sumitomo is by far the largest contributor.) At the end of JFY 2002 (March 31, 2002), all three were making relatively small but certainly non-negligible profits. By that time, Sixon’s market capitalization exceeded the equivalent of approximately $85 million so that it no longer was classified as as a small business under Japanese law.
Although most of current interest in technology transfer in Japan is focused on transfers from the academic to the industrial sector, better utilization of the research results of national laboratories is also being emphasized. The extent of this activity seems to have increased since April 2001, when virtually all government laboratories became independent administrative organizations.
The case of the National Institute for Advanced Industrial Science and Technology (AIST) is particularly noteworthy. The organization has existed in its present form only since April 2001. Prior to that time the initials AIST were used to designate the Agency for Industrial Science and Technology, an organizational unit within the Ministry of International Trade and Industry (MITI). At that time AIST operated 15 research institutes, eight of them in Tsukuba, the remaining seven scattered throughout the country. As its name suggested, the mission of AIST was to conduct research that would be interesting and useful to Japanese industry. However, it was generally conceded that the AIST laboratories were not particularly effective in that respect. One problem, among many was that since Japanese companies were regulated by MITI, close working relations between AIST and industry researchers could have been construed as a conflict of interest. More seriously, perhaps, many AIST researchers preferred to devote their talents to basic research rather than to the types of applied research that would be useful to industry.
AIST was substantially reorganized on April 1, 2001, when all institutes which constituted the “old” AIST became independent administrative organizations. (NSF Tokyo Office Report #00-05) To emphasize the fact that a substantial reorganization was in progress, the name of the entire complex of institutes was changed to the National Institute for Advanced Industrial Science and Technology. The system of eight institutes in Tsukuba which had largely defined the old AIST was reorganized into about 40 research units. Approximately half of these were called centers which have lifetimes up to seven years and focus their research activities on specifically defined problems. The remaining units are called institutes. These are meant to exist indefinitely (or at least as long as they do reasonable work) and have more broadly defined research programs [5]. Additionally, the seven AIST institutes in other parts of Japan were reorganized as nine regional research bases, most of which focuses on a specific research area.
The new AIST receives baseline funding from Ministry of Economy, Trade and Industry (METI), which replaced MITI on April 1, 2001. However, these funds are not intended to be sufficient to support all research activities in AIST’s centers and institutes. Because of this shortfall, directors of AIST research units are strongly motivated to collaborate with, and seek support from, private industry. AIST also derives income from so-called entrusted research projects from industry and on royalties obtained from licensing its patents. The baseline support that METI allocates to each AIST research unit is now determined to some extent by the results of annual evaluations; these evaluations are scheduled to become more important determinants of the budgets of each research unit starting in JFY 2004. Three evaluations of individual AIST researchers were carried out between April 1, 2001, and March 31, 2003. These evaluations determine whether a given researcher receives a bonus, as well as the amount of any such bonus;
According to Kazunobu Tanaka, a member of AIST’s Board of Trustees, the culture of AIST has changed considerably since April 2001. Researchers are now thinking more in terms of conducting industrially-relevant research, rather than basic research undertaken for the sake of their own curiosity. There is also a great deal more interdisciplinary research (that is, research involving personnel from several AIST units), as well as substantial collaborative research with private companies. Dr. Tanaka attributes a good deal of this cultural change to the three evaluations of individual researchers that were carried out between April 1, 2001, and March 31, 2003. In preparing for their evaluations, AIST researchers have been obliged to think about how their own activities are furthering the aims of the organization.
The fundamental raison d’etre for both the old and the AIST was to conduct research that would be at least of interest, if not of value to private industry, and to develop effective methods for transferring relevant research results to industry. There is considerable evidence that the new AIST is carrying out those tasks more effectively than was the case before April 1, 2001. Much of this improvement may be due to the fact that the scientists and engineers who direct AIST’s research units are now free to make many of their own decisions regarding their research directions rather than having to defer to METI. Also, the size of each unit is too small to allow it to conduct a viable research program without reference to other related AIST units and/or private industry. Some of the new orientation is probably also due to the changes in the attitudes of individual researchers that Dr. Tanaka has emphasized. In any event, AIST is now engaged in all three of the technology transfer modes highlighted earlier with reference to universities: 1) direct collaboration between researchers from AIST and from private industry; 2) licensing research results to industrial firms; and 3) encouraging and nurturing start up companies.
Direct cooperation. Cooperation between AIST’s research units and privately-owned Japanese companies has increased considerably since April 2001. As of March 31, 2003, 400 researchers from private industry were detailed by their companies to work full time in AIST. By way of comparison, at the end of JFY 2002, AIST had 2500 resident researchers on permanent of contract status, 900 university students most of whom were conducting PhD dissertation research within AIST, and 700 visiting foreign researchers.
In addition to the 400 visiting researchers from Japanese companies, several ad-hoc research groups have been created involving AIST researchers and industry and/or university researchers who work part time on joint projects. METI, which remains AIST’s parent organization, has approved an AIST-designed policy for sharing intellectual property rights arising from collaborative research between AIST and private companies.
In addition to direct research cooperation with industry, AIST accepts contracts for what it refers to as Entrusted Research. During JFY 2000, the last year of the old AIST, there were only five such entrusted research cases, for which the relevant companies paid AIST a total of 18 million yen. During JFY 2001 there were 78 such cases, worth 370 million yen; during the first nine months of JFY 2002 there were 75 entrusted research cases with a total value of 545 million yen.
Licensing research results to industry AIST, in common with many Japanese universities, has established a Technology Licensing Organization (TLO) to file patent applications for inventions based on research conducted in its laboratories, and to license those patents to industry. METI has approved AIST’s policy of granting 25 percent of royalty rights earned as a result of those licenses to the researcher who was responsible for the relevant invention.
During JFY 2000, the old AIST filed slightly more than 1000 Japanese patent applications. An approximately equivalent number were filed by the new AIST during JFY 2001 and the first nine months of JFY 2002. But although the number of patent applications filed has remained approximately constant since the new AIST was created, the number and value of its licenses to private industry have increased dramatically. In JFY 2000, AIST concluded 149 licensing agreements with industry, which were worth 46 million yen in royalties. In JFY 2001 it concluded 187 such agreements with a value of 144 million yen and during the first nine months of JFY 2002 concluded 228 agreements with a value of 246 million yen.
The fact that Japanese companies have significantly increased the number and value of the licenses obtained from AIST suggests that the research conducted in AIST units is regarded as being at least interesting and, perhaps, even useful to private industry
Encouraging and nurturing start up companies. The old AIST permitted its researchers to establish start-up companies based on the research they conducted in AIST institutes. However, only eleven such firms were created between January 1988 and March 2001. In contrast, seven start-ups were established during JFY 2001, the first year of the new AIST; and four more were established during the first seven months of JFY 2002.
AIST offers incubation services to its researchers who establish start-up companies, and these researchers remain on the AIST payroll for as long as they desire; that is, presumably indefinitely. AIST grants exclusive licenses of its patents to these start-up companies. It also transfers to them up to 50 percent ownership of its intellectual property rights.
Although AIST receives its baseline support from METI, it appears that MEXT is also impressed with its technology-transfer activities. AIST has received a substantial grant from MEXT to explore the problem of how to create effective spin-off firms and make effective use of venture capital funds. MEXT also provides partial support for incubators for several start-up companies in Tokyo’s expensive Marunouchi district.
The Need for Data
Any qualitative extrapolation of the small sample of university-based technology transfer activity discussed earlier to the entire country suggests that the objective of the 2nd (as well as the 1st) Science and Technology Basic Plan to utilize the results of university research for the benefit of the country is being addressed in a variety of ways, many of them novel. Although much of this activity (including all TLOs and many start-up companies) may be too new for a detailed, nation-wide assessment of its effectiveness, some sort of interim evaluation of a more representative sample than is considered in this report should be possible. Of course any such assessment would have to be based on reliable quantitative data.
Quantitative information for the universities similar to that compiled by AIST as indicated in the previous section deserves to be compiled. For example, reliable and broadly based data on the number of patents licensed by each TLO in Japan, as well as the extent to which each TLO is (or is not) becoming profitable, would be useful. So would quantitative information about new start up or spin-off companies, including: the numbers of such firms created each year, the scientific fields relevant to their activities, and their geographical locations. Data should be gathered about the sources of venture capital for such start-ups. Longitudinal data on the performance of at least a representative sample of high tech start up firms needs to be gathered periodically to determine which of them are succeeding (measured, for example, by their total capitalization and/or the number of skilled people, including scientists and technicians that they employ), and which of them have failed after a given number of years.
It is probable, indeed almost certain, that many if not most of these data already exist in a variety of scattered locations: e.g., records of engineering faculties in universities throughout the country, records maintained by government ministries, primarily MEXT and METI, and prefectural and regional business and commercial organizations. A useful project for aspiring young Japanese policy scholars would be to identify sources of these data and, perhaps, to begin to assemble and perhaps analyze the most promising parts of those data.
Acknowledgements
A good deal of this report is based on interviews conducted in Japan during March/April 2003. I am grateful to those who agreed to meet me for the information they provided and the insights I gained from them. In particular, I wish to acknowledge Robert Kneller of Tokyo University’s Research Center for Advanced Science and Technology; Tsuneo Nakahara of the Sumitomo Electric Industries; Kunihiko Taniguchi, of Osaka University’s Collaborative Research Center for Advanced Science and Technology; Yuko Suemura, of the Handai Frontier Research Center; Kazumi Matsushige, of Kyoto University’s International Innovation Center; Shinichi Masaki, of the Kansai Technology Licensing Organization; Shinichi Kaneko and Hideki Nakamura, of the Kanagawa Academy of Science and Technology; Kunihiro Kitano, of AIST’s International Affairs Department; and Kazunobu Tanaka, a member of AIST’s Board of Trustees. Needless to say, any errors that appear in my descriptions of their institutions are entirely my own.
I am grateful to the Japan Society for the Promotion of Science (JSPS) for awarding me a short term invitational fellowship to support my visit to Japan, and to the National Institute for Science and Technology Policy (NISTEP) for serving as my host institution during that visit.
[1]. Research cooperation between Japanese universities and industry was much more common during the 1950s and 60s when Japan was still trying to regain the economic status it had enjoyed prior to WWII. (See H. Inose, et al, in Arthur Gerstenfeld, (ed.), Science Policy Perspectives: USA-Japan; Proceedings of the Second US-Japan Science Policy Seminar, New York: Academic Press, 1982, pp. 43-62.)
[2]. See, e.g., Robert Kneller, “University-Industry Cooperation and Technology Transfer in Japan Compared with the US: Another Reason for Japan’s Economic Malaise?” Univ. of Penn Journal of Economic Law, vol. 24, #2, Summer 2003.
[3]. METI has announced a plan, called the Hiranuma Plan in honor of the METI Minister Takeo Hiranuma, to have 1,000 university-oriented venture business firms created during the period 2002-2004. Half that goal had been reached by the end of 2002.
[4]. According to a Nikkei survey, venture capital firms spent 167 billion yen (~$1.4 billion) on university-based start ups, and other biotechnology and nanotechnology firms during JFY 2002. Among these firms, Softbank Investment was the largest investor accounting for 30 billion yen.
[5]. Several additional centers and one additional institute were created after April 2001 so that by the end of JFY 2002, AIST consisted of 30 centers and 21 institutes.