Inventions and the innovation process in Japan and the US: Highlights from the US-Japan Inventor Survey

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1 (Some numbers still preliminary) Inventions and the innovation process in Japan and the US: Highlights from the US-Japan Inventor Survey Sadao Nagaoka* and John P. Walsh** March 2008 Professor, Institute of Innovation Research, Hitotsubashi University Research Counselor, Research Institute of Economy, Trade and Industry ** Associate Professor, Georgia Institute of Technology We would like to thank the research assistance by Naotoshi Tsukada, Wang Tingting Connie Huang, Taehyun Jung and Yeonji No. 1

2 I. Design of Inventor Surveys Pioneered by PATVAL, followed by RIETI, GT/RIETI Survey inventors (rather than R&D managers) for specific R&D projects Large sample, broad technology/industry coverage Comparative (JP-US, also Europe) Measures Inventor Career, Mobility, Background and Motivations Invention Process, Collaboration Business objective of R&D, R&D strategy and performance Uses of the Patent, Commercialization 2

3 Primary Sampling Frame OECD Triadic Patent Families Triadic Patent Families Compiled by OECD Sharing, either directly or indirectly, at least one priority patent applications in three patent offices Filed in EPO and JPO and granted in USPTO Advantage of using the TPF Reduce home country bias Focus on economically important patents (Random sampling would result in targeting most questionnaires to economically unimportant patents. Filing in multiple jurisdictions works as a threshold) Disadvantage of using the TPF Select subset of inventions, and even of patented inventions. Likely to be biased toward commercialized inventions Perhaps, bias against nonprofit, small, and/or independent inventors? 3

4 Triadic patents in the total picture Japan 8% in terms of the share of granted patents by Japanese applicants US 23% of US patent grants (any country of origin) are triadic [Jensen, et al., 2005] Level of commercialization of triadic and non-triadic patents in Japan according to the RIETI Survey Triadic non-triadic The share of the patents used internally by a firm (%) The share of the patents licensed by a firm (%) 56% 41% 23% 14% 4

5 Data Japan: 5,300 responses 20.6% response rate (27.1% adjusted for undelivered, ineligible, etc.) triadic patents: approximately 70% (about 3600 responses) non-triadic patents: approximately 30% very important patents (selected from the JPO reports and the essential patents of standards): roughly 120 patents US: 1,900 (all triadic) 24.1% response rate (31.8% adjusted) Comparisons based on triadic patent samples Created country-technology weights to adjust for different composition across technology in each country Effects of the weighting quite small. 5

6 Table 1. Composition of the sample Category Name No. Sub-Category Name 内容 JP US Chemical 11 Agriculture, Food, Textiles 農業 食品 繊維 1.6% 0.4% 12 Coating コーティング材料 処理方法 製品 2.2% 1.8% 13 Gas ガス 1.2% 0.6% 14 Organic Compounds 有機化合物 3.3% 3.2% 15 Resins ゴム 樹脂 プラスチック加工 3.4% 4.4% Computer & 19 Miscellaneous-chemical その他の化学 5.7% 12.1% Communications 21 Communications 通信機器 システム ( 光通信を含む ) 4.4% 7.8% 22 Computer Hardware 符号化 暗号化 画像処理 1.6% 2.1% 各種情報処理技術 アプリケーション ビジネス特許 カーナ 77 Computer Software ビ マルチメディア 音声処理 データ圧縮 人工知能 データーベース 情報セキュリティ 3.4% 4.9% Drug &Medicals Electrical &Electronic Mechanical Others 23 Computer Peripherals コンピューター周辺機器 2.1% 1.7% 24 Information Storage 情報記憶装置 メモリ 3.3% 2.1% 31 Drugs 医薬 3.5% 5.2% 32 Surgery & Medical Instruments 手術 医療機器 2.3% 6.3% 33 Biotechnology バイオ 2.4% 2.1% 39 Miscellaneous-Drug&Med その他の医薬 医療 1.2% 1.5% 41 Electrical Devices チューナー コンデンサー 増幅器等電子デバイス 2.5% 2.4% 42 Electrical Lighting 電気照明デバイス 装置 イルミネーション 2.6% 1.7% 43 Measuring & Testing 電気 光学 温度を用いた計量 実験装置 3.0% 3.2% 44 Nuclears & X-rays 原子力工学 X 線 その他の放射線技術 2.0% 2.1% 45 Power Systems 電力供給 バッテリー 電動式モーター 4.7% 4.7% 46 Semiconductor Devices 半導体デバイス 製造プロセス 電子ロジック回路 超伝導 3.5% 2.9% 49 Miscellaneous-Elec. その他の電気分野 3.3% 1.7% 51 Materials Processing & Handling ガラス 石材 木材のカッティングなど各種加工技術 2.8% 2.9% 52 Metal Working 金属カッティング 接着などの加工技術 金具 3.7% 2.6% 53 Motors, Engines & Parts モーター エンジン ブレーキ バルブなどの部品 4.0% 2.9% 54 Optics カメラ プロジェクトなどの光学機器 デバイス 2.7% 2.2% 55 Transportation 鉄道 船 タイヤ エレベータ リフト 宇宙飛行など 2.0% 1.7% 59 Miscellaneous Mechanical その他の機械分野 3.4% 2.1% 61 Agriculture, Husbandry, Food 肥料 飼料 タバコ 食品加工 2.4% 0.7% 63 Apparel & Textile 衣服繊維 2.1% 0.5% 64 Earth Working & Wells 削孔 採鉱 0.5% 0.3% 65 Furniture, House Fixtures 家具 据え付け品 1.4% 0.5% 66 Heating 加熱 2.3% 0.4% 67 Pipes & Joints パイプ 継ぎ目 1.8% 0.7% 68 Receptacles 包装 容器 1.5% 1.0% 69 Miscellaneous-Others その他 ( おもちゃを含む ) 6.2% 6.4% 3,

7 II. Inventor Table 2 Basic profile of the surveyed inventors and their organizational affiliations Trilateral patents Japan US Europe Academic background Sample size 3,658 1,912 9,017 University graduate (%) Doctorate (%) Female (%) Age (years old) Employed at large corporation (251 or more employees) (%) Organizational affiliation Employed at small or medium-sized corporation(%) Institutions of higher education(%) National research institutes or other government organs (%) Foundations and other organizations (%) Source: RIETI Inventor Survey (2007) for Japan, Europe s PatVal for EU (covering six countries: Germany, France, England, Italy, Spain, and the Netherlands). Note: The inventors who have no organizational affiliations are extremely rare. 7

8 Figure 1 Inventor mobility- Within 5 prior year, have you worked for another employer? (%) 30 Yes(secondment) 25 Yes (employment) JAPAN US 8

9 Figure 2. Share of the inventors who moved in last 5 years before the invention (%, bar: Japan line: US) experience of working in another firm within 5 years Biotechnology Agriculture, Husbandry, Food Measuring & Testing Metal Working Drugs Receptacles Transportation Materials Processing & Handling Communications Surgery & Medical Instruments Resins All Semiconductor Devices Information Storage Electrical Devices Nuclears & X-rays Organic Compounds Computer Software Motors, Engines & Parts Power Systems Computer Peripherals Coating Computer Hardware Optics Electrical Lighting

10 Figure 3. Inventors Mobility, From-To [in Biotech, US] Move from: University Competitor Non-competitor within the same industry Hospital A firm more than 250 employees A firm less than 250 employees University or college Move to 10

11 Figure 4. Source of mobility in Japan (% of the moved inventors) 40 univ Move from: national or reginal research organization, including national projects private foundations others 30 customers 25 suppliers competitor Non-competitor within the same industry 10 related firms large firm small firm 3 0 other firms oth 11

12 Figure 5. Inventor Functional Affiliation JAPAN US Independent R&D unit R&D sub-unit affiliated with manufacturing unit* Manufacturing Software development Other Note: The Other category includes design and engineering sectors. 12

13 Inventor motivations What motivates inventors? How important are financial rewards directly tied to the commercial success of the invention work? Asked for Likert-scale scores on a variety of motivations: Satisfaction from solving technical problems; Satisfaction from contributing to progress of science; Society good Generating value for firm; It is my job Prestige/reputation; Recognition from co-workers; Recognition in my profession; Career opportunities Monetary rewards; Beneficial working conditions Note: be careful about potential Socially Desirable Response [SDR] bias 13

14 Figure 6. Inventor Motivations JP: above bar Satisfaction from solving tech. problems Satisfaction from contributing science Generating value for my firm Career advance Prestige/ reputation Beneficial working condition Monetary rewards US JP %High (4 or 5), weighted 14

15 III. Characterizing the Invention Process Nature of Project Product vs. process Invention process (targeted vs. serendipity) Time How long the research lasted until the patent application How many man-months the research required Outcome Product vs. Process 15

16 Figure 7. Technological Goal of Research Project JAPAN US Creating a new product Improvement of an existing product Creating a new process Improvement of an existing process other A.2 What would best describe the type of innovation your research was expected to realize? 16

17 Figure 8. Product vs. process patents JAPAN US Product Process both %Yes, weighted D.6. What would best describe the type of the invention? 17

18 Figure 9. Invention Process (Targeted v. Serendipity) JP: above bar Targeted achievement of a research project Expected by-product of a research project Unexpected by-product of a research project US JP Related to my job, and then developed further No R&D Involved %Yes, weighted 18

19 25 Figure 10. Man months for an Invention JAPAN US Less than or equal to 3 man-month 4-6 man months 7-12 man months man months man months man months man months D.16. How many man-months did the research leading to the patent require, including those of co-inventors? 97 man months or more 19

20 Figure 11. Calendar year for an invention JAPAN US year 2 year 3 year 4 year 5 year 6 year 7 year 8 year 9 year 10 years or more D4 How many months did the research leading to this patent last until its application? 20

21 Figure 12. External Co-inventors, by organization type %Yes, unweighted 21

22 Figure 13. Formal/Informal Collaborations (excluding co-inventors), by organization type %Yes, unweighted 22

23 Figure 14A: Sources of Information- Suggesting New Project D.12. Excluding co-inventors, how important were the following sources of knowledge for suggesting the research that led to the patented invention? (%yes) Competitors (e.g. knowledge from its products) Suppliers Customers or Product users Non-University Public Research Organization University and Education Your firm excluding co-inventors Standard documents, such as those from ISO (standards, contributions) technical conferences and workshops Trade Fair or Exhibition Patent Literature Scientific and Technical Literature US (above) JP %High (4 or 5) 23

24 Figure 14B: Sources of Information- Contributing to Project Completion D.13. Excluding co-inventors, how important were the following sources of knowledge for contributing to the completion of the research that led to the patented invention? (%yes) Competitors (e.g. knowledge from its products) suppliers Customers or Product users Non-University Public Research Organization University and Education Your firm excluding co-inventors Standard documents, such as those from ISO (standards, contributions) Technical conferences and workshops Trade Fair or Exhibition Patent Literature Scientific and Technical Literature US JAPA %High (4 or 5) 24

25 Figure 15. Business objectives of the research (%Yes) JAPAN 60 US Creating a new business line* Enhancement of existing business line Enhancement of the technology base of the firm or the long-term cultivation of technology seeds, not associated with current business other 25

26 Figure 16. Share of projects for enhancing technology base, bar: Japan line: US Enhancement of technology base Biotechnology Nuclears & X-rays Drugs Materials Processing & Handling Computer Hardware Semiconductor Devices Power Systems Surgery & Medical Instruments Organic Compounds Computer Software Metal Working Computer Peripherals All Electrical Devices Communications Receptacles Electrical Lighting Measuring & Testing Coating Motors, Engines & Parts Information Storage Resins Agriculture, Husbandry, Food Optics Transportation 26

27 IV. Business objectives of R&D and commercialization process R&D for enhancing the existing business of a firm is more common in Japan R&D for enhancing the technology base or for cultivating seeds is much more common in US Especially in semiconductors, information storage, computer software, optics US more focused on exploiting technological opportunities and/or building absorptive capacity? 27

28 Figure 17. Characteristics of R&D by business objectives (Japan) 70% 63% 60% 57% 50% 52% 40% 34% 41% 34% 30% 20% 15% 27% 13% 21% 28% 23% 10% 0% core businesses In-house utilization ratio (%) Top 25% in economic value (%) non-core businesses new businesses Strengthening the corporate technological base Importance of science and technology papers in the conception of inventions Note: In-house utilization" indicates the ratio of inventions used in the products or production processes of the firm in question. Top 25% in economic value refers to the ratio judged by the inventors to fall in the nation s economic top quarter of the technology accomplishments. Importance of science and technology papers in the conception of invention refers to the responses stating that such papers are very important in inspiring the invention. 28

29 Figure 18. The relationship between the man month and the value of the patent by business purpose Economic value 3.9 core businesses new businesses 3.7 Strengthening the corporate technological base & cultivating seeds 線 ln(manmonth) Based on the survey in Japan 29

30 Figure 19. Use of the inventions Has this patent been exploited commercially by yourself or any of your co-inventors for starting a new company? US JAPA Use of the invention If Yes, does it include cross-license? Has this patent been licensed? Has the applicant/owner ever used this patent for its product or for its production?

31 Optics Electrical Lighting Figure 20. Share of patents used for startups, bar: Japan line: US starting a new company Nuclears & X-rays Agriculture, Husbandry, Food Materials Processing & Handling Biotechnology Metal Working Computer Peripherals Computer Software Drugs All Measuring & Testing Surgery & Medical Instruments Transportation Motors, Engines & Parts Coating Organic Compounds Information Storage Semiconductor Devices Electrical Devices Communications Receptacles Power Systems Resins Computer Hardware

32 Figure 21A. Estimated Number of Patents Use in 60.0 Commercializing the Invention (own and others) JAPA N US domestic patent to 5 6 to more than 1001 F.5.How many domestic patents are jointly used, together with your patent in the commercial application of the invention? 32

33 Figure 21B: % of the Sectors where Commercialization Requiring more than 10 Patents, by Sector patent form a product(greater than 10 patents) Biotechnology Receptacles Electrical Devices Surgery & Medical Instruments Measuring & Testing Agriculture, Husbandry, Food Resins Metal Working Drugs Nuclears & X-rays Organic Compounds Materials Processing & Handling Transportation Power Systems All Computer Hardware Coating Computer Software Electrical Lighting Communications Optics Semiconductor Devices Motors, Engines & Parts Computer Peripherals Information Storage

34 Figure22. Reasons for patenting (very important share,%) JAPAN US Internal exploitation of the patented technology Blocking Prevention of inventingaround Licensing to generate licensing revenues Cross-licensing Pure defense Corporations reputation Inventors reputation Reasons for patenting 34

35 Figure 23. Appropriation Strategies (%, very high) Product/Process complexity Collaboration with the firms with complementary technologies Patents enforcement 8 34 F10.Commercialization strategy Secrecy Complementary sales/service capability US JAPAN Complementary manufacturing capability First mover s advantage in commercialization First mover s advantage in the follow-up development of complementary technologies and the patent portfolio

36 Figure 24. Finance Shares of R&D Projects D.17 What are the sources (shares in %) of the funds for the research leading to this patent, including that for personnel? Funds from venture capital or angels Suppliers for parts, materials, equipments, software etc Customers or product users Other companies Government Research Programs or other government fund Internal funds of the patent applicants (including his subsidiaries US JAPAN Note: Averages not adjusted for project size. Internal funds includes debt or equity funding 36

37 Figure 25. The share of venture capital finance of R&D bar: Japan line: US venture capital Nuclears & X-rays Communications Biotechnology Agriculture, Husbandry, Food Materials Processing & Handling Measuring & Testing Power Systems All Coating Organic Compounds Resins Computer Hardware Computer Software Computer Peripherals Information Storage Drugs Surgery & Medical Instruments Electrical Devices Electrical Lighting Semiconductor Devices Metal Working Motors, Engines & Parts Optics Transportation Receptacles

38 Figure 26. Financial Constraints on Business R&D, Spillover and Government R&D support in Japan 35% 33% core businesses 30% 28% 29% non-core businesses 25% 22% 24% new businesses 20% 15% 14% 16% 17% 19% 16% 14% Strengthening the corporate technological base 10% 8% 5% 5% 6% 2% 1% 0% R&D investment constrained Commercialization investment constrained Publication of a scientific/technical paper Government support 38

39 V. Tentative conclusions Key findings in terms of similarity and difference of US and Japanese invention and innovation process High similarity between US and Japan despite large institutional differences: - Relatively small contribution from universities as inventors and collaborators - Inventor motivations - Proportions of product vs. process patents - Time input for inventions - Level of use of patents - High proportion of inventions the idea for which do not originate from R&D etc. 39

40 Key differences - High inventor mobility in US - More use of patents for startups in US - More exploratory R&D with more serendipities by US firms - More license in Japan - More emphasis by US firms on FMAs and patent enforcement relative to complementary manufacturing and sales capability 40