In light of the new broadband infrastructure and conditions supporting Japanese e-commerce, the importance of the new software patent protection is heightened. With the increase in Internet connection speeds, the demand for downloading patented computer software is likely to increase. And since e-commerce systems are dependent upon computer programs, the projected increase in the size of the e-commerce market in Japan will have significant implications for the importance of software patents.

Alongside the growth in the e-commerce market and developments in software patenting law, another aspect worth considering is the area of Business Method Patents. These are called Business Model Patents (BMPs) in Japan and have seen a significant increase in volume in recent years, although it is now said that the boom is over.

Research in Derwent World Patents Index®, which covers patents from 40 patent-issuing authorities, indicates that the number of BMP applications increased globally approximately six-fold between 1995 and 2000. In Japan, there was a five-fold increase in the number of BMP applications between 1999 and 2000. (INFOSTA, June 2002). Although there are differences in the definition and standard of BMPs between the Japanese, United States and European patenting systems, Japanese companies are keen to acquire BMPs to enhance their business position.

However, the rate at which BMP applications have been approved as granted patents has been decreasing, dropping to 25% in 2000. (Nikkei Newspaper, Aug. 7, 2001). The lack of clarity surrounding the definition of BMPs may have been the primary cause of the low approval rates. Since BMPs require software technology as part of the business method, it is likely that the clearer definition of software patents provided by the new Japanese law could boost the approval rates for BMPs once more.

Pro-patent policy by the Japanese government
On July 3 2002, the intellectual property strategy committee of the Japanese government announced its pro-patent (pro-intellectual property) policy. Although there has been criticism of the policy for being "insufficient" about the contents, its stated aim is for Japan to become one of the best countries for protection of intellectual property rights. (Asahi.com July 3, 2002)

This may not have as great an impact for the Japanese industry as the Young Report of 1985 did in the United States under the Reagan administration for strengthening pro-patent policy. However, the message by Prime Minister Junichiro Koizumi to Japanese industry is that the government is essentially pro-patent. It could also help make software engineers more aware of the importance of patent information in Japan.

The need for comprehensive prior art sources
In light of all these recent developments surrounding software patents and patent policies, it is obvious that the importance of software patents is on the increase. To survive in the competitive Internet era, Japanese companies need to know about prior art for software to support their research & development programmes.

It is critical to conduct comprehensive prior art searches to increase the probability of a software patent application being approved and issued as a granted patent.

Traditionally, Japanese software engineers only search patents published in Japan for prior art. They may not realise that foreign patent searches are necessary to secure patent protection for their invention. In particular, software programs on the Internet will create more challenges as the Internet covers the boundaries of many countries. Derwent's patent database may be one solution for Japanese software engineers looking for prior art. Derwent Information's flagship patent database, the Derwent World Patent Index covers patents from more than 40 patent-issuing authorities. Each year 1.5 million new patent documents are added into the database, which now contains more than 20 million patent records. In the autumn of 2002, Derwent will launch a new service, Derwent Web of Software, providing web access to different sources of software and e-commerce prior art information, including patents and literature.

Implications of Japanese companies' pro-patent strategy for other countries
Following the changes in Japanese software patent law and possible changes in the Japanese companies' patent strategies, the effects of the new Japanese pro-patent policy may spread out to other countries. As more Japanese companies recognise the importance of conducting global patent searches and activities, it can be expected that they will increase the number of patent applications filed in other countries, by using PCT (Patent Cooperation Treaty) or the Paris Convention rule. As more companies filing software and business method patents are doing business globally through the Internet, this will become a busy space - and one to watch!

Toru Yamauchi is the Web Marketing Manager for Thomson Scientific's Japan office in Tokyo. He has contributed an article "Business Method Patent: The Information Source of Business Model Patents," for INFOSTA. He was a web site analyst before joining Thomson group, evaluating many e-commerce sites. He also has background as journalist in the United States.