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Chapter 8
IP ORGANIZATION AND MANAGEMENT
Chapter Contents:
8.1 Chapter outline
8.2 IP resources
8.3 IP organization
8.3.1 Organizational options for IP in general
8.3.2 Patent and IP organization and management in large Japanese corporations
8.4 Patent management and patent culture
8.5 IP organization at Toshiba and Hitachi
8.6 Further stages of the IP organization
8.6.1 Introduction
8.6.2 An extended IP department
8.6.3 Distributed intellectual capital management
8.7 Summary and conclusions
8.1 Chapter outline
This chapter will describe developments in the organization and management of IP resources
and activities in large Japanese corporations. Special attention will be paid to what can be
called a patent culture in those corporations. Such corporate patent cultures have developed
during a long period of time as described in Chapter 5 but have been strengthened
considerably from the 1980s onwards through developments in IP organization and
management, spurred by the outbreak of ”patent wars”, notably with large US corporations.
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Accordingly, IP resources have increased substantially, and the IP organization has become
upgraded, more centralized, more comprehensive, and has received more attention by top
management, technology management and business management. It appears as if Japan,
partly as a result of the pro-patent era, has developed still another area of management in
which Western companies have much to learn. The chapter also addresses the possible future
role of IP management and the further evolution of corporate management and organization.
With the increasing role of intellectual capital and the further emergence of what we can call
intellectual capitalism (see Chapter 10), it is conceivable that intellectual capital management
will develop, engulfing IP management. Which countries and companies will take the lead in
this development is an open question.
8.2 IP resources
The level of IP resources in Japanese corporations is considerably higher than in most
Western corporations, as is the output in terms of patent applications (see Chapter 5). As
mentioned, the IP resource levels have also increased during the 1980s, as have the numbers
of patent applications. Table 8.1 gives some examples of top IP spenders among Japanese
large corporations in different sectors.
As seen from Table 8.1, the electrical corporations top the list regarding the total
number of patent employees. The electrical industry was also the first and hardest hit by the
patent wars and therefore reacted early by building up in-house resources. In terms of the ratio
of patent employees to total employees, Canon is leading. However, it must be kept in mind
that the degree of outsourcing and centralization of IP resources and R&D varies among the
corporations. The degree of consolidation also varies. The figures for the total number of
employees, total sales and total R&D are self-reported in the questionnaires complemented
with officially reported figures.
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Table 8.1 Japanese corporations with most patent employees (in 1991)
Corporation Patent Total Pat.empl./ Total Total R&D/
employees1) employees3) Tot. empl. R&D sales sales
(%)4) (MUSD)2) (MUSD)2) (%)
Electrical:
Toshiba Corp. 370 162 000 0.23 2 390 35 507 6.7
Canon Group 350 62 700 0.56 830 14 053 5.9
Matsushita Electric Co. Ltd 340 210 848 0.16 2887 49 619 5.8
Hitachi Ltd. 330 324 292 0.10 3 690 58 173 6.3
Fujitsu Ltd. 210 155 779 0.13 2 947 25 880 11.4
Sony Corp. 200 110 000 0.18 1 504 27 068 5.6
Mechanical:
Honda Motor Co., Ltd. 150 85 500 0.18 1 459 32 342 4.5
Toyota Motor Corp. 130 102 423 0.13 3 233 74 099 4.4
Chemical:
Asahi Chemical Ind. 70 27 018 0.26 300 9 785 3.4
Mitsubishi Kasei Corp. 70 17 000 0.41 379 9 479 4.0
Notes:
1) Number of persons working more than half time with patenting activitiesaccording to questionnaire. See note
4.
2) Consolidated data, including majority owned subsidiaries worldwide. Conversion rate used
is 1USD = 133JPY.
3) Consolidated employee data.
4) Hitachi, Honda, Toyota, and Asahi reported non-consolidated data. It is therefore possible that the number of
patent employees may be greater than shown due to additional staff in majority owned subsidiaries not
reported. This would produce higher patent employee ratios for these companies.
Source: Questionnaire survey by the author and colleagues. Corporate annual reports.
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Table 8.2 then shows the general picture of patent and R&D resources in the sample. A
few observations in relation to Table 8.2 are noteworthy. First, total patenting costs have
grown considerably between 1987 and 1991, more than sales and R&D. However, the growth
of in-house patenting staff is much less, except for the electrical industry which has been a
forerunner in building up IP resources in the 1980s. The lower overall growth of in-house
patent employees compared to the growth of patenting expenditures is probably primarily due
to growth in foreign applications, but it could also be due to a growth lag that reflects both a
temporary peak in work load and bottlenecks in more long-term build-up of IP resources that
lead in turn to the growth in outsourcing. It could also be due to circumstances specific to the
mechanical corporations, which show the largest difference in growth ratios for patent
engineers and in-house patent costs.
Patent employees in Japanese large corporations are predominantly engineers, few are
economists and lawyers. The main strategy in building up in-house competence has been to
”convert” engineers to patent specialists, as is also indicated by the growth in percentage of
engineers in patenting. There are, moreover, significant differences across industries in the
degree of centralization of patent employees.
The chemical corporations were found to be most centralized and the electrical
corporations least centralized, although with a strong trend towards centralization among the
latter. On average, patenting is also more centralized than R&D and engineering.
1
For
example, about 20 per cent of IP personnel are located at corporate headquarters in Toshiba,
while the other 80 per cent work in various operations departments in the corporation. For
engineers in general at Toshiba, about 19 000 have at least a Bachelor’s degree or the
equivalent, and of these only 10 per cent work in corporate laboratories, while 10 per cent
work in development laboratories and the remaining 80 per cent in various other operations
departments.
1
A similar result was found in Etemad and Dulude (1987) as well for a sample of large European, Japanese and
US MNCs.
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A final observation is that on average ”patent intensity” in terms of the ratio of patent
costs to R&D costs is still fairly low, i.e. around 2.3 per cent, which by the way is less than
half the average R&D intensity, i.e. the ratio of R&D costs to sales. However, some
companies like Toshiba have a patent/R&D cost ratio around 10 per cent.
2
2
A study by the author of 10 US large corporations (GE, ITT, Xerox, Pfizer, Motorola, 3M, Honeywell, Control
Data, RCA, and Zenith) in 1985 showed a patent-to-R&D cost ratio in the range 1–3%. However, the ratio of
number of patent applications per R&D dollar has been over ten times higher in Japan relative to the USA in
leading chemical, electrical, and mechanical corporations.
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Table 8.2 Patent and R&D resources in Japanese large corporations
(Code) Question Chemical Electrical Mechanical Total
(n=9) (n=10) (n=5) (n=24)
(A1a) Total sales globally in 1991 (MUSD) 6 341 33 096 30 791 22 582
Growth ratio 1991/1987 1.31 1.43 1.45 1.42
(A2a) Total number of employees in 19911) 13 906 153 056 60 771 81 649
Growth ratio 1991/19872) 1.23 1.15 1.03 1.14
(B1) Total R&D expenditures worldwide
in 1991 (MUSD) 255 1 984 1 285 1 190
Growth ratio 1991/1987 1.38 1.56 1.50 1.53
(E7) Cost of in-house patenting department
activities and purchased services in 1991
(MUSD) 8.0 51.5 22.4 27.0
Growth ratio 1991/1987 1.63 1.35 1.17 1.43
(E6a) Number of persons working more
than half-time with patenting activities
in the company in 1991 40.8 217.2 94.8 121.6
Growth ratio 1991/1987 1.04 1.35 1.01 1.23
thereof:
(E6b) Percentage engineers 1991 83.8 62.6 76.8 74.0
Growth ratio 1991/1987 1.01 0.96 1.05 1.00
(E6c) Percentage lawyers 1991 4.9 6.3 2.2 4.9
Growth ratio 1991/1987 0.86 1.58 0.73 1.11
(E6d) Percentage working in
central/corporate headquarters 1991 75.0 37.6 46.2 54.1
Growth ratio 1991/1987 1.00 1.10 0.95 1.02
Key resource ratios:
(E6a/A2a) Percentage patent workers
in the company 19912) 0.32 0.17 0.22 0.18
(E7/B1) Patent cost/R&D cost 1991 (%) 3.1 2.6 1.7 2.3
(B1/A1a) R&D/sales 1991 (%) 4.0 6.0 4.2 5.3
1) The figures for the chemical and mechanical sectors are underestimated due to the inclusion of non-
consolidated company employee data.
2) Ratios are based solely on reported emplyee data from company questionnaires.
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8.3 IP organization
8.3.1 Organizational options for IP in general
There are various options concerning the organization of IP activities. They could be
combined in different ways, e.g. in a 3-tier organization with IP activities at corporate,
business area, and business unit levels plus parallel IP activities in an independent foreign
subsidiary or newly acquired company, all supplemented with outside patent firms, and law
firms. Thus, IP activities could be:
1) Centralized at corporate headquarters (mostly as a staff function)
2) Decentralized to business areas, business units and subsidiaries, domestic and foreign
3) Decentralized to one business division as a ”lead-house” with corporate-wide IP
responsibility
4) Organized as an independent IP business unit in the corporation
5) Externalized to a supplier organization, with one, two or more patent bureaus, agents,
attorneys and law firms (more than one is definitely advisable for a large company), or
to collective IP resources shared with others.
At the functional level IP may be organized:
1) As organizationally separate functions for various IPRs (patents, trademarks, copyrights
etc.)
2) As a comprehensive IP department, integrating various IP activities
3) Integrated with R&D, a special innovation company, a legal department, a licensing
department, a department for intelligence, information and documentation, or with
marketing.
Rarely is an IP department organized as a profit centre or business unit. Often it is a cost
centre with a cost-sharing arrangement, possibly with some services sold internally as well.
As a typical staff service function, the IP organization works in a matrix arrangement with the
line organization. Coordination is also achieved through committees, liaison people and the
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like.
Traditionally in Western companies, IP matters have not attracted a great deal of
resources and attention concerning their organization. Usually, IP activities have been split
into patenting and other activities and attached in a subsidiary manner as staff or service
functions to other functions in the corporation. A traditional large Western corporation has
typically had some kind of patent department attached to R&D or a legal department at
corporate level with some liaison engineers decentralized. Trademark-related activities have
mostly been attached to marketing. Sometimes, there has also been a separate licensing
department. While there has naturally been a certain amount of writings about the work
operations of IP-related departments and their staff, especially patent departments, there have
been few, systematic studies across companies, industries and countries. A classic study is
Taylor and Silberston (1973), which contains a sub-study of patent and licensing departments
in approximately 30 UK companies in the chemical and engineering industries. Some of the
findings in the Taylor- Silberston study may well represent the traditional situation in many
other Western companies and will therefore be described here.
3
Taylor and Silberston distinguish between four types of patent organizations.
4
The types
(1–4) differ primarily in terms of size (from small to large), degree of internationalization of
specialist operations (from low to high), and degree of formal organization and management
(from low to high). The four types refer only to patenting, and thus do not differ in terms of
an expanding set of functional responsibilities outside the patenting area. The first type of
patent organization has no specific arrangements other than having a chief engineer or a
technical manager assuming responsibility for patenting. There is no special staff and
3
Another of the rare studies of size and organization of patent departments is Bertin and Wyatt (1988), who
made a questionnaire survey 1983-84 of 118 large firms (corresponding to a response rate of 22%) in 15
countries and 6 sectors. The average number of full time employees involved in patenting services in 9
responding Japanese firms was 118.
4
The authors call them successive stages of patent organization, but present no historical evidence that the types
constitute stages in some sort of evolution of the patent organization. Nevertheless, given that patent resources
grow overall, the types are likely to follow roughly upon each other, possibly with some leaps.
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therefore he must rely fully on outside patent agents. The second type of patent organization
has an in-house patent specialist with a very small staff but still relies greatly on outside
patent agents. The third type, considered a typical industrial patent department in the study,
has a central patent department at corporate headquarters, headed by a specialist middle
manager as patent manager, that is qualified as both a patent agent and an engineer. This
department has a central staff, supplemented by liaison individuals or small units of patent
specialists in the R&D and production units, as well as some outside patent agents, especially
for work on foreign applications. The fourth and final type is termed the ‘super patent
department’ in the study. The total staff of this type of patent organization ranged from
around 35 to 50 patent employees, including secretarial and clerical staff, performing all
professional patent work except that which needed foreign agents. The largest of such patent
departments, of which there were only a few in British industry at the time (late 1960s), were
able to handle several hundred UK priority applications. There were perhaps five or more
foreign applications for each of these. Licensing was likely to be a separate department. The
traditional functions of the patent department as identified in the study included: obtaining
and maintaining patents (including identifying patentable inventions in the organization and
deciding whether to patent or not); opposing patent applications of others; handling
infringements; linking up with licensing and litigation when needed; dealing with foreign
patent work; and performing as a clearing-house for technical information in the firm,
including the monitoring of patenting by others.
8.3.2 Patent and IP organization and management in large Japanese corporations
The patent organizations in large Japanese corporations in the 1990s have a number of
common features that clearly distinguish them from the traditional patent organization in large
Western corporations.
IP resources
The resources devoted to IP activities are not just slightly larger, they are often larger by a
360
magnitude.
Centralized IP department
Responsibilities for patenting and other IP matters have been integrated and centralized into a
comprehensive IP department at corporate level. In fact, all 24 corporations in the sample had
a centralized patent department with corporate-wide responsibilities for patent coordination,
headed by one central corporate patent manager. Usually, this department had similar
responsibilities for other IP matters as well; there was an organizational trend showing
evolution from a patent department to an IP department and from a patent manager to an IP
manager.
Status of the IP department
The status and power of the patent and IP department has risen. Questions about patents and
related matters were regularly discussed at company board meetings in most of the
corporations, and often the IP manager reported directly to the CEO. The career paths to top
management positions often have resided substantially in R&D with involvement in IP
matters, and several Japanese CEOs were strongly IP-oriented. The IP department was thus of
strategic concern under pro-active management, not just a reactive service department.
Consequently, there was a need for sustainable in-house competence on a substantial level
and scale. Still, much patent work was outsourced.
Clearing-house
Substantial emphasis and resources were devoted to having the patent department serve as an
active clearing-house for technical information, with activities for technology scanning
internally and externally, patent mapping, patent clearance, dissemination etc. Sometimes,
technology intelligence was conducted in special subsidiaries as well. Such information-
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related activities are clearly important but in Western companies they have been difficult to
maintain, coordinate and link to decision-making. Often the Western patent department has
scanned and disseminated patent information without adding much value for the user, and
without much follow-up and feedback (cf. Chapter 9). Japanese firms also experience
difficulties like these, but they tackle them in more determined and systematic ways.
Integration of IP and R&D
Good working relations between the patent department and R&D were emphasized. This is a
natural concern in Western firms as well, however the Japanese patent department was
usually more powerful than a reactive service department purely under the aegis of R&D.
Patenting people were regularly involved in the early stages of R&D, not casually called in at
too late a stage as has often been the case in Western companies. Patent management operated
pro-actively rather than reactively responding to requests from business and R&D operations
and was expected to take sufficient initiative in order to secure viable patent positions in
various business and technology areas. Needless to say, that is not an easy task as business
divisions become increasingly independent. In general, corporate patent management in Japan
had more power than their Western counterparts.
To illustrate, in one corporation a review of patent positions was regularly undertaken at
an early stage of entering a business and/or technology area. If the review showed an
unfavourable ”jungle” of patents, the IP manager had the clout to hold up the project until
some kind of patent clearance (through e.g. licensing) had been undertaken. However, more
common than vetoing, an IP manager had the possibility to bring such a situation to the
attention of higher management.
Patent (IP) culture
The Japanese patent organization was immersed in what can be called a patent culture in the
corporation. This is an important feature that will be dealt with in the next section.
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8.4 Patent management and patent culture
Chapters 5 and 6 have described how Japanese industry, and large corporations in particular,
have developed a general orientation concerning patenting. This orientation could best be
described as a patent culture residing within and between companies.
5
The patent culture did
not develop as a result of a grand design but was instead part and parcel of a catch-up process
that started after World War II and was further strengthened after the emergence of the pro-
patent era in the 1980s. That is not to say that managerial action cannot influence the
formation of a culture in business, such as a patent culture. The early efforts of Mr.
Takahashi, at the national level, are one example of such action (see Chapter 5). The efforts of
Mr. Saba, former CEO and Chairman of Toshiba, and Mr. Yamaji, former CEO and vice
Chairman of Canon provide other examples.
The question is to what extent can a patent culture be fostered by managerial action in a
corporation. A more general question is how a corporate culture in general could be formed.
Japanese corporations are renowned for having built strong corporate cultures by various
means. Needless to say, a well-functioning culture of some sort could be an effective vehicle
for coordinated, purposeful action, and as such, could work as an efficiency-enhancing control
mechanism. At the same time a culture could become a barrier to change. Moreover, in
society as well as in large corporations, there is a fair amount of cultural diversity with several
subcultures that may clash with one another.
6
Thus there is a need for management to consider how to influence cultural formation
and change. General managerial instruments that are mentioned in the management literature
as useful in bringing about cultural formation and change are: strategy and policy formation,
recruitment, promotion, restructuring of communications through organization and location,
5
The concept of culture has come into popular use – and misuse – in management in the last few decades.
Despite a certain vagueness and tendency to use culture as a catch-all concept, it will be used here since it
captures some important, if yet evasive, features in organizations. A standard textbook in social psychology has
the following definition: ”Culture includes all institutionalized ways and the implicit cultural beliefs, norms,
values and premises which underline and govern conduct” (Krech et al. 1962, p. 380).
6
A subculture is simply ”a culture within a culture”.
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and campaigns of various sorts. There are also less tangible managerial actions representing
elements at a fundamental level within a culture, such as actions that influence language and
values, create symbols and rituals, integrate company life with social life and leisure
activities, take on social responsibilities, strengthen ideologies, nurture common myths, and
create implicit incentive and penalty structures. The importance of company leaders as role
models who live as they preach is also extremely important.
These are all general elements in fostering a culture in a corporation, and it is in the
nature of things that an exhaustive listing of elements cannot be made and that many elements
are intangible, requiring much managerial sophistication. When it comes to building a
corporate patent culture that was found in the large Japanese corporations studied, the
elements become more specific. Some of these elements, as observed, are dealt with below, in
no particular order.
Top management involvement in patenting and IP
Top management involvement is indeed a necessary but insufficient condition. It is typical for
most Japanese corporations to have top management involved in technology and R&D. Many
corporations, too, have had a preference for technologists as CEOs, although there are
corporations such as Hitachi and Toshiba that prefer a succession of technologists and
commercialists as CEOs. In either case they are almost always members of top management
with an appreciation of patenting matters, often having direct personal experience. Some top
managers make it a habit to ask questions about the patent situation during business
presentations, and some also make it a habit to visit labs and discuss, among other things,
patenting in more casual ways. It is important to show concern and at the same time refrain
from letting obsolete or otherwise insufficient technical knowledge or one’s own pet ideas
misguide R&D.
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Patenting and IP as a common concern for all engineers
Although specialists are always needed for patent work, it is considered important not to
consider patenting primarily a specialist function but to make patenting a common concern for
all engineers. Training courses, job rotation and career paths with at least an early stint in a
patent department are valuable, together with the other measures described below.
Patent policies and strategies integrated in business plans
Without a requirement that makes patenting and IP a regular and specified item on the agenda
of business plans, business managers will easily neglect the IP situation or let IP strategies
become too generalized and watered down. Integration of business and IP aspects is not only
a matter of thinking hard and coming up with cunning ideas but is also a matter of two-way
communication with some integration of business language and IP language. ”What is our
unique competence in this business?” is a common question in business analysis. The equally
important, but less commonly used IP–related question is ”How can we protect our unique
competence in this business?”
Clear patent objectives
Clear, quantified objectives for patenting were common among the Japanese corporations in
the study. An example is given by Hitachi, which had the objective of increasing the number
of strategic patents by 25 per year, as described in Chapter 7. There are many arguments
against quantifying objectives, and often patenting people produces such arguments. One
argument is that quantified objectives are said to stimulate quantity rather than quality of
patents and foster unfruitful competition. On the other hand, quantification focuses attention
and provides clear yardsticks for rewards and penalties, as well as for improvements. The
arguments for quantifying objectives appear to be stronger when building a patent culture.
Such objectives then function as symbols and provide a basis for habitual behaviour, even
rituals, such as ”Kamikaze research”, which describes the patenting frenzy in Japanese
companies at the end of the budget year in order to meet quotas. Such behaviour could be
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seen as going too far, but nevertheless is part of the patent culture.
Clear patenting incentives for R&D personnel and organizational units
The issue of how to reward inventive work by individuals, teams and units is a very important
and fundamental question in both Japanese and Western firms. This is a complex issue that
could be elaborated at great length. Without doing so here, one can just point to the clear and
fairly strong reward schemes employed by Japanese firms, often developed without the
adversarial relationship between the firm and the inventor that easily develops in Western
firms. The following citation is in contrast with the top management view, not uncommon in
Western firms, that R&D people basically are salaried for doing inventive work.
We try to encourage the view that the company’s value to society lies in developing
new technology. We also try to provide a corporate environment where thought and
originality are rewarded.
We give annual cash awards to the employee who has applied for the most patents that
year and to those who have developed patents or software of an outstanding nature.
Keizo Yamaji
Former CEO, Canon Group
Fostering of behavioural attitudes and norms
Fostering of behavioural attitudes, norms, habits and standards conducive both to technology
protection by patents and secrecy and to technology intelligence can be done in various ways.
For example, certain reading and writing habits of engineers can be encouraged, as in Canon.
A citation by Dr. Yamaji may again illustrate:
I encourage our researchers to read patent specifications rather than academic theses and
to write patent applications rather than technical reports. I also tell them to make virtual
experiments (”Gedanken” experiments) in order to have them apply for more and more
patents, so that we can be prepared for the era to come when only some companies,
strong in patents, will cooperate with each other and survive.
Keizo Yamaji
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Former CEO, Canon Group
Canon, as well as other companies, also tries to encourage writing habits by aligning the
reporting on R&D work to the norms and standards used in patent documents. In this way,
patent application work is facilitated while thinking in patent terms is encouraged.
Speaking, listening and observation habits of engineers, salesmen, managers etc. could
also be influenced for protection and intelligence purposes, although extreme behaviour in
this regard may be counter-productive in other respects.
Visible organizational means
Tangible and intangible means for building a patent culture have to complement each other.
Examples of visible organizational means besides the ordinary patent organization are patent
promotion centres, patent liaison officers distributed in the organization, corporate-wide
patent campaigns, patenting prizes, and patent strategy seminars.
Language, methodology and philosophy
A common language is central to any culture. One way to foster a professional language for a
patent culture is to develop concepts and tools and employ them in a methodology for
analysis and in communication, which could be further turned into a philosophy. The patent-
mapping methodology described in Chapter 9 was developed in Japan by JPO initially and
then improved over time by large corporations. It has been a useful methodology for several
purposes in itself, but at the same time it has contributed to building a patent culture through
its influences on language, analytical perspective, conceptualization and communication.
Finally, it must be emphasized that corporate patent cultures are embedded in and
reinforced by an overarching industrial and national culture, conducive to patenting,
inventions, intelligence, and so on. There is a wide range of institutional arrangements for this
with government agencies and initiatives, legislation, associations, institutes etc. The
367
historical dimension is important and Chapter 5 gives some features of it for Japan. The large
Japanese corporations as a whole play an increasingly important role. The corporate IP
managers know each other well and are part of various ”old boy networks” (to use a Western
term). The Japan Patent Association (JPA) is a good example of an organization primarily
catering to the interests of large corporations since long ago.
7
8.5 IP organization at Toshiba and Hitachi
Toshiba is one of the leading Japanese corporations in the IP field, with top rankings in terms
of e.g. number of patent applications and patent employees. Thus, it is natural to look at the
history, organization and management of IP in Toshiba in greater detail.
Table 8.3 indicates that the organizational history of Toshiba and its R&D and IP
resembles, at a very general level, the organizational development in a large Western
corporation. The corporation grew, diversified, refocused and internationalized. At the same
time, R&D established early as a separate lab, grew, diversified, differentiated into product
and process development and research and organized into a mix of centralized/decentralized
labs under a technology management structure. At a later stage, R&D became
internationalized, a process that began fairly late in Toshiba. The IP organization became
established as a patent department at an early stage, also by Western standards (comparable to
stage 2 in Taylor and Silberston's study described above). The IP organization has historically
been oriented around patenting, which grew and was upgraded in the organization, adopted a
centralized/decentralized mix, internationalized, and finally consolidated into one large
department with various IP activities that grew up in a diversified way over the years. Thus
developments in the corporate organization shaped, often with some time lag, the
developments of the R&D organization, which further shaped the IP organization.
7
JPA was formed in 1938 by patent attorneys employed in some large corporations including Toshiba and
Hitachi. It was originally named Chrysanthemum Feast Club (Chōyō Kai) and was renamed Japan Patent
Association (Nihon Tokkyo Kyōkai) in 1959 (Rahn 1983, p. 473).
368
Table 8.3 Key historic events in Toshiba’s corporate, technology and IP organization
Some key events in Some key events in Some key events in
corporate organization R&D organization IP organization
1870 Shibaura Electric established
1890 Tokyo Electric established
(first producing light bulbs)
1906 R&D lab established
in Shibaura Electric
1912 Patent Section est'd
1918 Matsuda R&D lab
established in Tokyo Electric
1931 Tsurumi R&D lab
established in Shibaura Electric
1939 Toshiba established as merger
of Tokyo Electric and
Shibaura Electric
1944 Patent Division est'd
1960s Cooperation with NEC and GE
in computers
1961 Corporate research
lab established
1968 Heavy industry research 1968 A decentralized system
lab established adopted
1970 Production engineering
lab established
1972 Start of trainee
education for foreign
countries
1976 Adopts GE type of organization
(with business portfolio analysis,
business units etc.)
Decides to focus on electronics
and information technology.
1978 Exit from mainframe 1978 Labs in business units
computers established in a 3-level
organization under business
sector labs and corporate labs
1979 Washington Intellectual
Property Office
(”WIPO”) established.
1980s Promotion of globalization, 1980s Various new labs established,
and E&E strategy e.g. a VLSI lab in 1984.
(energy & electronics). The ‘Tokken’ system for
Later extended to 3E – R&D management established
energy, electronics together with the 3-level
and environment. R&D organization.
1989 ICTs account for over 1989 Intellectual Property
50% of sales Division established
Source: Material from Mr. Saba, Mr. Takayanaga, Mr. Norichika, Miyazaki (1995), and interviews.
369
Figure 8.1 shows the overall Toshiba corporate IP organization in the mid-1990s. One
can note that each business group has an integrated IP department or section under the
business group management but also a functional administrative management arrangement
with the corporate IP division. The latter in turn is at the same staff level as R&D and the
design centres.
Figure 8.2 further shows the inner organization of the IP division, with departments for
each major type of IPR, except trade secrets, plus departments for licensing and patent
information. Toshiba Techno Center also performs patent analysis but for various reasons is
organized separately. Finally, there is a relatively large department for planning and
coordination of IP departments in business groups. Thus, the IP division is by and large
comprehensive, and represents another stage beyond the ”super patent department” in the
study by Taylor and Silberston (1993).
Education in IP, both for IP personnel and engineers corporate-wide, is important in
Toshiba, as in any company seriously responding to the pro-patent movement. Table 8.4
shows Toshiba's patent education system.
Similar, although not identical, IP organizations can be found in other large Japanese
corporations, as illustrated in Figures 8.3 and 8.4 in the case of Hitachi and in Figures 8.5 and
8.6 in the case of a representative chemical corporation (as a contrast to the focus so far on
electrical corporations). Figure 8.7 also gives a bird's-eye view of how R&D and patent
departments cooperate in the Hitachi case.
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Table 8.4 Toshiba’s patent education system (as of 1995)
Career stage IP-related Engineers
personnel
When entering IP generally IP generally
the company
Introductory Basic education Freshman course
education First term collective education on business and
Second term collective education patent/IP rights
1–3 years Advanced course Basic knowledge about
Research of precedent cases the patent system
Patent surveys
Ways to summarize proposals
Mid-level Selection Patent review/patent maps
personnel Drafting specifications in English Improving the quality of proposals
Patent application management
Patent specialty courses
System of overseas patent study
Deputy managers Family training 1) Family training 1)
Patent supervision Patent supervision
Managers Family training Family training
Patent strategy Patent management
Note:
1) Training and socializing in off-the-job settings (signs of titles and positions removed, night-time sessions etc.)
Source: Mr. K. Norichika, Toshiba.
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Figure 8.1 Toshiba IP organization (as of 1995)
CORPORATE TECHNOLOGY COMMITTEE
STAFF
Corporate Environmental Protection & Production G.
Productivity Div.
Manufacturing Engineering Research Center IP S
Technology Planning & Coordination Div.
INTELLECTUAL PROPERTY DIVISION
Washington & West Coast IP Office
Toshiba Techno Center. Ohgo Patent Office
Research & Development Center IP D
Design Center Design Patent D Design Patent D
BUSINESS GROUP (DIVISIONS)
Information Processing & Control Systems G. IP D
Information Equipment & Automation Systems G. IP D
Electronics & Telecommunication Systems G. IP S
Medical Systems Div. IP S
Electron Tube & Device G. IP D
Semiconductor G. IP D
Video & Electronics Media G. IP D
Air conditioners & Appliances G. IP D
Energy Systems G. IP D
Industrial Equipment G. IP D
Material & Components G. IP S
Legend:
IP = Intellectual Property, D = Department, S = Section, G = Group
–––––– Organizational Management (with direct business line responsibility)
– – – – Administrative Management (with indirect functional staff responsibility)
President
&
Chief Executive
Officer
Senior Executive
Vice Presidents
Board
of
Directors
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Figure 8.2 Toshiba IP division (as of 1995)
Planning & Coordination
Technology Contracts & Legal Services
Software Protection
Designs & Trademarks
Patent Application & Management
Patent Licensing 1
Patent Licensing 2
Patent Information Center
Washington IP Office
West Coast IP Office
Toshiba Techno Center Inc.
Intellectual Property
Division
Ohgo Patent Office
Legend:
––––– Organizational Management
Administrative Management
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Figure 8.3 IP management in Hitachi
Management Function of Intellectual Property
Executive Committee, Budget Council for Research Deliberation of basic policies on
Laboratory Management Conference, intellectual properties
Long-Term Business Plan Council
Intellectual Property Committee
Deliberates various measures on
intellectual property activities.
Headquarters Staff Function
Line Support Function
Technology Contracts & Legal Services
(Window and Control for Litigation)
Corporate Research &
Development Promotion Office
Intellectual Property Office
Respective Staff Group
President
Directors in Charge
(Negotiates licensing)
(Patent application,
processing disputes)
(Window and Control for Litigation)
Meeting to deliberate measures
on other firm's patents
Business Division
Business Office Patent
Strategy Meeting
H Works
(15 groups)
P Patent Group
A Research Laboratory
Patent Department 1–3
Licensing Department 1–2
Secretary's Office
Source: Hitachi
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Figure 8.4 Organization of Hitachi's corporate IP department
Personnel & Education Group
Patent Planning Group
Foreign Administration Group
Administration Group
Office Automation Group
Patent Information Group
Trade Mark Group
Copyright Protection Group
(Overseas Licensing Work)
(Domestic Licensing Work)
(Related patent work involving power & industrial system &
equipment, some consumer electric appliances,
automotive products, instruments)
(Work related to patenting of consumer electric appliances,
air conditioning & refrigeration
and telecommunication and design patent work)
(Work related to computer and semiconductor patents)
Intellectual Property Office
Patent Department I
Patent Department II
Patent Department III
Licensing Department II
Licensing Department I
Source: Hitachi
375
Figure 8.5 Representative organization of a corporate IP department in a large
Japanese chemical corporation
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Figure 8.6 An IP organization model representative for a large Japanese corporation
IP Tasks Invention Business Relevant IP Committee or
group group department department conference
1 Strategic planning of Steering Committee
Intellectual property management for R&D activities
2 Obtaining of patent rights
Drafting & request for application
Final drafting & application procedure ●
Request for examination ●
Registration & payments ●
3 Obtaining of Foreign Patent Rights Patent evaluation &
Request for application ● ● foreign patent application
Drafting and application ● committee
Registration & payments ●
4 Patent assessment & maintenance ● ● Patent evaluation &
Watching for possible conflicts ● maintenance committee
Opposition & actions for infringements ●
5 Agreement on technology transfer ● (Legal dept) ● Steering committee for project
6 Patent approval or patent clearance or ● ● or ● or Patent committee for project
7 Patent information management ● or or ● or
8 General affairs
System management &
Award management ● &●
IP education ●
Follow up of new laws & regulations
Legend: = Decision; = Requesting or Planning; ● = With discussion; = Information; = Execution; = Collaboration
Source: Kindly provided by Dr. Akira Mifune.
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Figure 8.7 Hitachi's ”PAS System” (Patent strategy system)
Pivotal research and development • Acquiring strategic patents and use of rights • Eliminating patents posing as obstacles
PAS Promotion Committee
• Selection of theme
• Formulating patent strategy
• Follow-up on status of promotion
Research and
Development Department
General Manager,
Research Laboratory
Person in charge
of promotion
Researcher • Engineer
Patent
Department
Patent Department
manager
Deputy in charge of promotion
Patent Engineers
PAS Conference
• Preparing PAS map
• Imaging patent network
• Reviewing strategic patents
• Measures for other companies' patents
Source: Hitachi
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8.6 Further stages of the IP organization
8.6.1 Introduction
As we have described in this chapter, the leading-edge Japanese patent department of the
1990s is clearly another stage beyond the ”super patent department” found in a few leading
UK firms during the late 1960s as studied by Taylor and Silberston (1973). The patent
departments in some of the largest US firms have also evolved substantially since the 1980s.
In the wake of the patent wars and the pro-patent era, many Western firms have in fact
initiated processes for overhauling their patent organizations.
A natural question, then, is how the patent and IP organization in large firms will evolve
into still further stages. First, one can note that temporary variations occur which may not be
significant for long-term trends or shifts. A certain cooling has affected the US-Japan patent
wars since the early 1990s, and some reductions of IP staff have been made in several
Japanese corporations during the Japanese recession in the mid- and late 1990s.
The long-run trend showing an increasing role for intellectual capital (IC) in firms, as
described in Chapter 4, are most likely to have profound effects on their future IP
organization and management, especially in an increasingly competitive environment.
Already, many industrial firms have major portions of their assets as well as their investments
geared towards intellectual capital, and new types of firms are emerging in which IC clearly
dominates (see Chapters 1 and 4). Compared to the large share of IC in the total resources of
large, technology-based corporations, the share of resources devoted to the IP department
appears minor and mis-matched indeed. Patent departments have always been minor entities
in firms, even in Japan, and still are viewed as functional departments despite the growth of
their resources and their transformation into IP departments with more comprehensive IP
management responsibilities. However, the formal organization of IP-related activities is not
the most important concern. For the foreseeable future, few people in a traditional
manufacturing firm would dream of formally reorganizing R&D, advertising, human resource
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departments etc. into one large department, division or business area for intellectual capital
with some kind of executive corporate IC manager.
8
Nevertheless, an organizational
arrangement of that sort could be feasible. In fact, a ”pure” IC firm or a firm in which IC
resources dominate could in itself be viewed as such an arrangement, in which case the CEO
is the corporate IC manager. Having an IC unit accountable on a normal balance sheet and
profit/loss account is thus feasible. This is certainly not to say that accounting and
organizational principles would make a large IC unit an attractive solution in a more
traditional manufacturing firm. A few US companies have tried to let the patent department
operate as an internal profit centre. Internal and external licensing agreements then provide a
suitable institutional mechanism. The experiences are mixed, however, and there are risks of
short-termism, high transaction costs and transactions detrimental to the core business
divisions. There have also existed pure technology license brokers in traditional industries,
but without manufacturing and the possibilities to bundle proprietary technology with
physical products they are vulnerable in the long run. In service industries, like insurance,
more creative attempts have been made to account for IC on the balance sheet, but so far
without separate profit/loss accounting.
9
Appointments of IC managers or Intellectual Capital
Directors have also occurred in this context. What is more important than the formal
organization, though, is how the informal organization, the culture, and the organization as a
whole will change in response to the increasing role of IC.
At a general level, there is a shift in management thinking towards knowledge
management, the knowledge-based corporation, the learning organization etc. However, it
could be argued that knowledge per se is not the primary concern for a firm. It is when
knowledge is turned into an exploitable resource in a competitive environment that it becomes
8
Labels such as Chief Information Officer (CIO), Chief Knowledge Officer (CKO), IC Director, Intellectual
Asset Manager, and the like do crop up, however, as fads within information businesses proliferate.
9
See Fortune (1994) for the case of the European insurance company Skandia. The article also illustrates how
US companies like Dow Chemical run their patent departments as profit centres.
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of value to a firm, i.e. when knowledge becomes an asset or a piece of intellectual capital. The
same could be said about inter-personal relations when viewed as corporate resources. The
ways (or strategies) to turn knowledge and relations into IC are many, some of which are
objectionable in society. Ownership is one way in principle, but it is difficult to exercise for
institutional and social reasons. Having intellectual workers as ”slaves” owned by the firm is
indeed infeasible, and exploitation of personal relations is limited by social conventions.
Many limitations of ownership of intellectual resources relate to very strong and fundamental
cultural elements in societies in general, such as concern over personal integrity, individual
freedom, democracy and so on. Some limitations also derive directly from the institutional
framework, in particular, the legal framework.
More important to a firm than the ownership aspect of IC per se is the control or
managerial aspect. That is, the key issue from a firm's point of view is how to obtain and
maintain sufficient control of the possible rents from IC for appropriation purposes. It does
not necessarily have to be total control, only control that in some sense enables satisfactory
appropriation of rent streams for the firm as an IC possessor (or IC controller). For this
purpose, there are no ready-made managerial philosophies or tools. What we can call IC
management and IC organization are most likely to develop as a professional area in the
future at various levels – corporate, individual, national etc. Two kinds of scenarios for
organizational and management development will be elaborated here. The first will be called
an extended patent department, and the second shall be called a distributed IC management
with IC resources and responsibilities distributed in the organization.
8.6.2 An extended IP department
Can the patent and IP department in large, technology-based corporations be extended beyond
the type of IP departments emerging in Japanese industry? Without elaborating in detail, a
few arguments for such extensions will be offered.
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Communication node
IP-related aspects penetrate a wide range of activities in a firm. The more IC based the firm is
the greater the penetration. This penetration often requires two-way communications, which
give IP staff large contact networks in the organization and the IP department the potential to
become a communication node in the firm.
Attention to detail
IP-related activities have to be focused, especially because of their legal aspects. Dealing with
IP requires focusing on concrete inventions, trademarks etc., and attention to order and detail.
Trade secrets are less concrete but may still require attention to detail.
Emergence of IC
As has been repeatedly emphasized, the value of IPRs as assets and competitive means has
increased substantially since the 1980s and will probably continue to increase. Firms in
general will become increasingly IC-based. In addition, the range of ”pure” IC firms will
evolve further in various industries and service businesses, and new types of IC firms are
likely to emerge.
Short and long term management
IP-related activities have a wide span in the time dimension. They interact with technical and
commercial activities in both the short and long run. There are immediate patent races where
the winner takes all, as well as patents that may be kept valid for 20 years. Licensing contracts
are typically long-term, which necessitates long-term planning. Thus, IP-related activities
instil both urgency and long-termism, and thereby have the potential to induce people to try to
integrate the often conflicting short-term and long-term views of a business firm.
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Technical information centre
IP-related activities are, and must be, closely connected to many sources of detailed
information of various kinds – technical, commercial etc. Thus, the IP department may also
function as an information centre or clearing-house for technical and commercial information
in the organization. This is especially the case for technical information, which will be dealt
with more in Chapter 9. The time value of patent-related information also gives an incentive
to deploy new information and communication technologies. This in turn may further be used
to extend the role of the patent department as a technical information centre, as well as to
extend its role in information security, which also relates to trade secret protection.
Integration of licensing and patenting
Licensing in and out is one area that sometimes has been integrated with patenting and IP.
Although company situations and licensing strategies differ, the need to centralize licensing
and integrate it more with patenting have increased in general, everything else equal. This is
mainly due to the increasing amount of cross-linkages between patents, technologies,
products, companies and markets arising from diversification and internationalization. New
generic technologies emerge, products and companies become increasingly ”mul-tech”, i.e.
multi-technology based, and companies increasingly become globalized (see Granstrand and
Sjölander 1990 and Granstrand and Oskarsson 1994). These cross-linkages or
interdependencies in turn require increased coordination, especially since licensing contracts
are long-term in nature. Too often companies, small as well as large, regret having sold a
license on an ad hoc basis by a too independent and opportunistic business unit.
Integration of IP and R&D
R&D and technical cooperation agreements of various types also increasingly involve IP
matters that, just like licensing, may require central coordination and cooperation with the IP
department.
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Integration of patenting and technology scanning
Another area that to some extent has been integrated with patenting is technology scanning,
using patent information. This is an area in which capabilities of various sorts (methods, data
bases, communication networks, software tools etc.) develop fast, and Japanese companies are
in the forefront together with some US companies. (This will be the main topic of Chapter 9.)
At one extreme, these activities could be limited to a rudimentary form of ”patent watching”
and the standard distribution of the front pages of patent documents in the company,
something that is not uncommon in Western firms. At another extreme, activities could
extend into full-fledged technology intelligence integrated with business intelligence and
perhaps further integrated with technology planning.
Technology planning
Technology planning in itself is an activity that is quite emphasized in Japanese large
corporations – again in contrast to many Western companies, in which strategic planning,
long-range planning, technology planning etc. on the whole became demoted after the oil
crises. It could be argued that an activity like technology planning is more justified in
companies trying to catch up. However, that argument does not fully explain the emphasis put
on technology planning in some leading Japanese corporations, where technology planning
departments are headed by highly qualified, mid-career technologists supported by a staff of
considerable size.
Trade secret and information security management
One further area, which naturally relates to IP but has not yet been managed in a systematic
way, is the trade secret area. Trade secret legislation is weak in many countries, but
strengthening measures are being taken and companies seem more willing to take trade secret-
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related disputes to court.
10
However, it is in the nature of secrecy itself that measures must be
strengthened primarily by the companies themselves. This could be done in various ways, but
an extended IP department is a natural locus for a central lead-house responsibility for
corporate-wide trade secret management, an area that probably will develop in the future and
possibly under other names such as information security. Such an arrangement is also aligned
with the role of the IP department in technology intelligence, as well as with the need to
complement patent protection with a more comprehensive view on protecting rent streams,
rather than protecting pieces of property.
Generate inventions
One possible, although controversial, role for an extended IP department is to generate
inventions, i.e. to perform some inventive work, a role that is traditionally assigned to R&D.
The IP department should, of course, not take over that responsibility from R&D but have it
as a supplementary task. With competent patent engineers, cross training of engineers in the
IP department, and technology intelligence and IP activities vested, the IP department would
be well positioned to contribute to inventive work.
11
Competence development
Certainly more roles and responsibilities could conceivably be relevant for an extended IP
department, and some are likely to evolve in the future that are as yet inconceivable. One role
deserving special consideration is the role of the IP department as a platform for competence
development, in other words as a training ground or a section in a corporate university. IP-
related activities need to link technological, commercial, economic and legal competencies.
10
An example of a large-scale secrecy legal case is the one regarding Volkswagen's hireover of Mr. Lopez from
GM, where GM allegedly lost many trade secrets. Other examples come from biotech firms in Silicon Valley,
where movement of key personnel between firms are accompanied by secrecy suits.
11
Note also, as described in Chapter 9, that patent mapping, as developed in Japan, could be and is used as a
creative tool as well.
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These correspond to distinct bodies of professional knowledge, education and careers, which
gives an IP department the potential for being a platform for extended competence
development. This competence development is primarily not intended for the IP department
itself, but for the company as a whole. Clearly, many companies have not been particularly
patent-oriented in the past and have consequently staffed their patent department with too few
qualified people.
12
If the IP department takes on additional new roles and responsibilities, its
need for internal competence development further increases. However, what is suggested here
is that IP-related activities are suitable elements in learning processes for many other
company activities as well. IP is a nexus of technological, commercial and legal aspects that
requires order and attention to detail, focused both on the short term and the long term. Thus
IP can provide a vehicle for competence development in several professional disciplines, as
well as for linking those disciplinary competencies together in concrete ways. Moreover,
general IP-oriented training may be needed in management and employee development in
general in order to make the company more IP-conscious. For example, engineers get training
in systematic functional design and technology analysis through analyzing patents, as well as
getting a feel for market analysis and business operations through preparing license
agreements and negotiations. These perspectives and skills are then useful to build upon in
technology management training. Similar examples could be given for other non-engineering
professional categories. An extended IP department can provide such an interdisciplinary
training ground in many of the usual ways – courses, seminars, case work, projects, on-the-
job training, job rotation and so on.
8.6.3 Distributed intellectual capital management
As IC becomes increasingly important to firms and countries, it is natural to ask what the
proper managerial responses should be, which of course is the million dollar question. In the
second scenario of distributed IC management the following are a few response strategies that
12
In all fairness it must be said that some of these have a high level of professional competence and insight in
the company's technologies, but they are bogged down in various tasks, leaving their real competence
underutilized.
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could be employed he following are a few strategies that could be employed.
Extensions of the IP organization
What has been said so far points to the need to consider an extended IP organization as one
response. However, a formal organization with departments, committees, managers,
specialists and so forth is insufficient. The arguments in the quality-management movement
of the 1980s against sole reliance on such an organizational response apply in this context as
well.
Transformations of corporate culture
The transformation of corporate culture is likely to be a complementary response to an
extended IP organization. Just as the patent organization could be extended to an IP
organization, which could further be extended to an IC organization (perhaps ultimately
encompassing the whole firm if it became sufficiently IC-based), the patent culture could be
transformed into an IP culture and perhaps further into an IC culture. Needless to say, cultural
change is far from something that can be managed at will. However, as described in the
previous section, cultural change can be influenced to various degrees by managerial action.
Having some kind of patent culture already in place is thus a good starting point.
Extending a patent culture to be a more comprehensively IP-oriented culture means
extending the property dimension. A further extension from IP to IC means adding a value
dimension and broadening the concern from mere legal property protection to rent control or
rent protection and the acquisition, development and exploitation of IC on the whole. In
principle, then, the managerial actions mentioned in the preceding section have relevance for
building an IC culture as well, although there will be additional difficulties (e.g. in clashes
between the company and a wider range of groups of people with strong concern about their
individual IC or their group's IC).
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Distributed management
Cultural formation and change take time, often too much time in the fast pace of
contemporary business. Thus a third type of managerial response may be necessary. This is
what could be called distributed management, which refers to a corporate-wide focused
reorientation with responsibilities distributed at management levels with no central
responsibility except to top management. For the most part, such an organization is
implemented swiftly on a broad front in order to create momentum in mobilizing and
motivating the organization, as well as to save time. Only a few (at the most) corporate-wide
re-orientations can be implemented at the same time. Often a similar reorientation is
implemented in many companies across industries at about the same time. Its form could be
labelled as a corporate campaign, a crash program and the like, and its content as a managerial
or organizational innovation, a management revolution and the like. It could also be a short-
lived management fad, especially if it fails. Attempts to make too many corporate re-
orientations at the same time also considerably weaken their prospects of success.
In the recent past, there have been several such re-orientations in the corporate world
based on various rationales, reorientations which on the average have been quite successful, at
least on the surface. Thus, there have been re-orientations focusing on inventory levels, total
quality, lead times and core competencies. The foci of these re-orientations or movements
share certain features, which then can be seen as likely requirements for success. Thus the
focus for a successful corporate-wide reorientation can be characterized as:
1) being concrete in character
2) being able to penetrate a wide range of activities
3) having a potential for visible improvements
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4) attracting realistic expectations in a situation susceptible to organizational change
5) having a direct and credible (and positive) influence on the basic and acceptable
objectives and visions of the organization.
These requirements could very well be fulfilled by IC-related activities. Thus, IC could
be the focus of a reorientation through distributed management. As with any form of
distributed management, there are then two sorts of rationale. One is that the activities or
operations in focus become improved. The other is that many other types of related activities
become improved as well in the process. This might seem to be a superficial side effect, but it
may in fact be the most important effect. By focusing on lowering inventory costs at all stages
(through Kanban etc.) the whole production and distribution organization can be improved,
since its slacks and deficiencies are more likely to surface. By securing and increasing quality
in a broad sense, innovativeness in the organization can be improved. By lowering lead times,
both improved efficiency and innovativeness across R&D, production and marketing
functions can be attained. By focusing on core competencies, which by common definition are
deemed more valuable, widely applicable and difficult to imitate, these competencies could be
improved and exploited more efficiently, while at the same time increasing the awareness of
the strategic value of IC. By focusing further on IC and its dynamics, IC management could
be improved at all levels in the corporation, while at the same time improvements in overall
efficiency and innovativeness are likely. Anyone with experience in intellectual work knows
that it has a tremendous potential for productivity improvements, although it takes hard work
to achieve.
8.7 Summary and conclusions
Partly as a result of a long process of catching up with the West and partly as a response to the
pro-patent era emerging in the 1980s and the ”patent wars” – hot as well as cold – with US
corporations, large Japanese corporations have developed leading patent management
390
practices and resourceful, comprehensive IP organizations. Apparently patent management is
still another example of a management area in which Western corporations have much to
learn from Japan.
Taylor and Silberston (1973), being one of the very few systematic studies of patent
organizations in industry, identified four types or stages. In relation to these, the patent
organization in large Japanese corporations represents a quite different fifth type, as
summarized in Table 8.5. A hypothetical sixth type is also described. Needless to say the
different types do not have to follow upon each other, and the table certainly does not suggest
that the future IC firm will be or should be organized around the patent department.
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Table 8.5 The evolution of the corporate patent organization.
Type Characteristics
1 Headed by part-time technology manager plus outside patent agents1)
2 Full-time patent manager with small staff plus outside patent agents
3 Specialized patent manager with a corporate patent department and
liaison people in business divisions
4 ”Super patent dept.” (35 – 50 persons). Separate licensing dept. 2)
5 Comprehensive IP dept. (50 – 500 persons) of Japanese type. Patent culture. 3)
6? Extended IP organization? (E.g. for technology acquisition and exploitation,
technology intelligence, technology planning, information management, idea
generation, competence development.)
(Future scenario) Merging with distributed Intellectual Capital Management
?
Notes:
1) Outside patent agents are used in all types but their relative importance is largest in types 1 and 2.
2) This is the fourth and most advanced type identified in the study of UK firms by Taylor and Silberston
(1973).
3) Comprehensive IP departments of this size can also be found in some leading Western firms. For example,
IBM reportedly in 1989 had 240 professional employees linked to its Intellectual Property Law Department.
However, in contrast to large Japanese IP departments, IBM’s was much more internationalized (with about 30
locations globally and circa 10% of the patent professionals located in Japan) and decentralized (with only about
5% working in corporate headquarters) and lawyer intensive (with circa 60% being US lawyers). Cf. Table 8.2
above.
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Many large Japanese corporations could also be said to possess a patent culture, which
can be characterized as having: top management involvement in patenting and IP; patenting
and IP as a common concern for all engineers; patent policies and strategies integrated in
business plans; clear patent objectives; clear patenting incentives for R&D personnel and
organizational units; behavioural attitudes and norms conducive to technology protection and
technology intelligence; visible organizational means to promote attention to patenting; and
special language, methodology and philosophy.
Patent organizations have also developed in many companies in the West during the
pro-patent era, although to a lesser extent on average than in Japan. In general, the patent
department has moved from being a small, reactive service department, often with low status
and narrow operative tasks decoupled from the business and top management, towards a
larger pro-active organization with more comprehensive IP responsibilities, more status and
power, more commercially oriented, more strategic concern and more interaction with
technology management, business management and top management. In addition to having
grown, diversified and become more integrated in the corporation, the IP organization has
also become internationalized as the R&D organization has internationalized.
Further developments in IP management and organization are conceivable. As the role
of intellectual capital, comprising IPRs, human capital and other intangibles become more
important in firms, intellectual capital management, encompassing IP management, might
develop in various ways. The IP organization may be further extended in terms of resources,
tasks and responsibilities, and there are a number of arguments for different types of
extensions. The IP organization may also become subordinate to a type of distributed
management of intellectual capital, signifying a reorientation of the whole company
organization towards its intellectual capital, somewhat analogous to the total quality
management movement.