Corporate Approaches to Protecting Intellectual Property

Implications for U.S.-Japan High-Technology Competition

Report of a Workshop

June 4, 1993

National Academy of Sciences, Washington, D.C.

Committee on Japan

Office of Japan Affairs

National Research Council

NATIONAL ACADEMY PRESS
Washington, D.C. 1994



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Corporate Approaches to Protecting Intellectual Property: Implications for U.S.-Japan High-Technology Competition Corporate Approaches to Protecting Intellectual Property Implications for U.S.-Japan High-Technology Competition Report of a Workshop June 4, 1993 National Academy of Sciences, Washington, D.C. Committee on Japan Office of Japan Affairs National Research Council NATIONAL ACADEMY PRESS Washington, D.C. 1994

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Corporate Approaches to Protecting Intellectual Property: Implications for U.S.-Japan High-Technology Competition NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievement of engineers. Dr. Robert M. White is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. Robert M. White are chairman and vice-chairman, respectively, of the National Research Council. This report was prepared with support of a grant from the Rockefeller Brothers Fund. Available from: Office of Japan Affairs National Research Council 2101 Constitution Avenue, N.W. Washington, DC 20418 Copyright 1994 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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Corporate Approaches to Protecting Intellectual Property: Implications for U.S.-Japan High-Technology Competition COMMITTEE ON JAPAN Erich Bloch, Chairman Council on Competitiveness Richard J. Samuels, Vice-Chairman Massachusetts Institute of Technology Sherwood L. Boehlert U.S. House of Representatives Lewis M. Branscomb Harvard University G. Steven Burrill Burrill & Craves Lawrence W. Clarkson The Boeing Co. Mildred S. Dresselhaus Massachusetts Institute of Technology David A. Duke Corning, Inc. James M. Fallows The Atlantic Daniel J. Fink D. J. Fink Associates, Inc. John O. Haley University of Washington Jim F. Martin Rockwell International Joseph A. Massey Dartmouth College Mike M. Mochizuki RAND Corp. Hugh T. Patrick Columbia University John D. Rockefeller IV United States Senate Robert A. Scalapino University of California, Berkeley Susan C. Schwab Motorola, Inc. Ex Officio Members: Gerald P. Dinneen Foreign Secretary, National Academy of Engineering James B. Wyngaarden Foreign Secretary, National Academy of Sciences and Institute of Medicine

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Corporate Approaches to Protecting Intellectual Property: Implications for U.S.-Japan High-Technology Competition OFFICE OF JAPAN AFFAIRS Since 1985 the National Academy of Sciences and the National Academy of Engineering have engaged in a series of high-level discussions on advanced technology and the international environment with a counterpart group of Japanese scientists, engineers, and industrialists. One outcome of these discussions was a deepened understanding of the importance of promoting a more balanced two-way flow of people and information between the research and development systems in the two countries. Another result was a broader recognition of the need to address the science and technology policy issues increasingly central to a changing U.S.-Japan relationship. In 1987 the National Research Council, the operating arm of both the National Academy of Sciences and the National Academy of Engineering, authorized first-year funding for a new Office of Japan Affairs (OJA). This newest program element of the Office of International Affairs was formally established in the spring of 1988. The primary objectives of OJA are to provide a resource to the Academy complex and the broader U.S. science and engineering communities for information on Japanese science and technology, to promote better working relationships between the technical communities in the two countries by developing a process of deepened dialogue on issues of mutual concern, and to address policy issues surrounding a changing U.S.-Japan science and technology relationship. Staff Alexander De Angelis, Director* Thomas Arrison, Research Associate Maki Fife, Program Assistant * Alexander De Angelis assumed the position of Director of the Office of Japan Affairs after the departure of Martha Caldwell Harris.

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Corporate Approaches to Protecting Intellectual Property: Implications for U.S.-Japan High-Technology Competition Preface This report covers major insights from a one-day workshop entitled “Corporate Approaches to Protecting Intellectual Property: Implications for U.S.-Japan High-Technology Competition,” organized by the Committee on Japan of the National Research Council and held on June 4, 1993. Part of a series focusing on defining U.S. interests in U.S.-Japan scientific and technological relations, the workshop was supported by a grant from the Rockefeller Brothers Fund. Jim F. Martin, a member of the Committee on Japan and director of the Palo Alto Laboratory of Rockwell International's Science Center, chaired the workshop. He was joined by experts familiar with the intellectual property strategies of corporations and by individuals with special expertise in the area of high technology competition. The National Research Council's Office of Japan Affairs worked with the chairman to focus the discussions at the workshop and to prepare this report, which captures major themes from the presentations and discussions. Those who made presentations at the workshop as well as the members of the Committee on Japan reviewed the report and provided many useful suggestions, but the report is neither a consensus document nor conference proceedings. Developments since the workshop confirm the importance of the issues raised in this report. One example is Japan's consideration of changes in its legal protection of software copyrights, which has become a significant issue in U.S.-Japan discussions related to intellectual property protection. The main questions are whether and in what circumstances decompilation of software will be allowed. Decompilation is a process that allows the functions of a computer program to be reproduced without directly copying it. A substantial portion of

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Corporate Approaches to Protecting Intellectual Property: Implications for U.S.-Japan High-Technology Competition the affected U.S. industries—mainly computer and software companies—has expressed concern that possible changes could, in effect, legalize software pirating in Japan. Other U.S. companies would like to see decompilation allowed for the purpose of developing compatible product interfaces. The U.S. government has been active in expressing U.S. industry concerns to the Japanese government. It is likely that this issue and others related to intellectual property protection and high-technology competition will continue to be subjects of interest and possible contention within the United States and between the U.S. and Japanese governments.