IP: Holding the Right Cards in Japan -- another view

[Dave Farber <farber () central cis upenn edu>]

Date: Thu, 07 Mar 1996 10:58:21 EST
From: BBCW52A () prodigy com ( THOMAS FLANNIGAN)


To Peter Kirby:


     It was interesting to read your opinion that Japan's
ministries "have not been doing a very good job" of protecting the
high-tech sector in Japan. I suppose I must be hallucinating when I
walk into a computer store here in Chicago and find almost
everything made in Japan or crammed with Japanese components. How do
you explain Japan's dominance of key links in the industrial food
chain if industrial policy has been such a flop?
     Most American companies with long standing market presence in
Japan were forced to trade their technology for market access. You
state that "TI used their technology as a weapon to obtain a wholly
owned corporation in Japan." For the record, Japan prevented
foreign ownership of more than 50 per cent of the voting shares of
a domestic corporation until well into the seventies.  TI had to
wait more than two years after this regulation was "repealed".  TI,
like IBM, was forced to license much of its technology to its
Japanese rivals in order to set up shop in Japan.
     Perhaps you should check this point with TI, as I have, but I
advise you to hold the telephone well away from your ear if you
take the trouble.  TI scientist Kilby invented the semiconductor,
but the Japanese patent office took 29 years to grant the patent
application.  As usual, Japan was the last nation in the world to
give patent protection to an American company's invention.  A large
Japanese electronics company crows that the Kilby patent expired
years ago, because the Japanese Patent Office sat on the
application for 3 decades.  How can you possibly say that TI used
technology as a "weapon"?
     Do you think it is a coincidence that Compaq computers finally
got shelf space in Akihabara at the same time Compaq threw in the
towel and started making a Japanese computer with an American name
on the box? The Compaqs sold in Japan have Japanese DRAM chips,
hard drives, keyboards and power units, coupled with Intel chips
made in Taiwan.  The modest sales of these machines may benefit
American shareholder elites, who can be enlisted to join in Japan's
public relations campaign, but such sales have almost no benefit to
the American worker, the trade deficit, or the future of this
country.
     Amway is a perfect example.  Hardly anything Amway sells in
Japan is made in the US. Meanwhile, Amway is an enthusiastic
supporter of Japanese trade policy. Shareholder elites make some cash but
the jobs continue their inexorable migration to East Asia.
     For years, I have read the Nikkei Weekly's annual report of
the top five companies, measured by market share, in 12 key
industries. Year after year, IBM Japan is the only foreign company
to crack the sweet sixty. Japanese companies lag foreign
competitors in pharmaceuticals and consumer nondurables to name
just two.  But Japanese producers in these and other fields are
shielded from foreign competition by government-sponsored cartels.
     The Japanese market is something like a Venus fly trap for
American companies.  It is enticing, and they feel they must enter,
but once inside they are trapped in an environment where their
technology lacks meaningful protection, and the best they can hope
for is an orderly fight over the table scraps.


Thomas Flannigan
Attorney in Chicago