Technology Licensing under Japanese Antitrust Law

Article excerpt

I. INTRODUCTION

Japanese antitrust law is a matter of remarkably keen interest in the United States. It has been a subject of Presidential summit meetings, (1) Congressional hearings, (2) official reports, (3) and considerable commentary. (4) On balance, this public discussion has been critical. Journalists, academics, and public officials frequently disparage Japan's competition law regime as weak, ineffectual, halfhearted and otherwise inadequate when measured against the standards set by its U.S. counterpart. (5) Specifically, critics fault Japanese antitrust for, among other things, inadequate sanctions, (6) ineffective private remedies, (7) insufficient enforcement, (8) discounting the interests of foreign firms, (9) and allowing Japanese companies to maintain private exclusionary practices that are thought to insulate Japanese markets from vigorous competition. (10) So serious are its concerns regarding Japanese antitrust, the U.S. government has officially identified the "weakness" of Japan's competition policy as a significant trade barrier (11) and exerted considerable pressure on Japan to remake their antitrust law and enforcement regime to resemble more closely that of the United States. (12)

Against this contentious backdrop, the Japan Fair Trade Commission (13) (JFTC) recently issued its first major policy statement on antitrust enforcement concerning technology licensing in a decade, the Guidelines for Patent and Know-how Licensing Agreements Under the Antimonopoly Act ("new Guidelines" or "1999 Guidelines"). (14) Because of the nature of the Japanese legal system, the issuance of new enforcement guidelines can be an event of some consequence. In Japan, where there is very little private antitrust litigation (15) and no state enforcement, (16) the JFTC institutes the overwhelming majority of Japanese antitrust cases. With an effective monopoly on enforcement in a legal system that generates very few court cases applying antitrust rules, (17) the Commission's enforcement guidelines play a central role in both interpreting the law and signaling its likely direction. (18) The new licensing Guidelines are also noteworthy because they address an area of economic activity--technology licensing--that has received relatively little attention in the ongoing U.S. debate over Japanese antitrust. (19) Moreover, the new Guidelines appear at a time of growing international recognition of the importance of intellectual property in national economies and international trade. (20)

This Article offers a critical examination of Japanese technology licensing antitrust law and enforcement policy. What emerges from this study is a complex picture of law and enforcement policy that is consistent with some aspects of the familiar critique of Japanese antitrust, but quite inconsistent with others. The principal conclusions of the paper are as follows: First, Japanese technology licensing antitrust policy is a work in progress that has undergone substantial change and development since its emergence in the late 1960s. Over the last thirty years it has evolved significantly: (a) away from overtly favoring licensees over licensors and toward greater neutrality; (b) away from favoring Japanese firms over foreign firms and, again, toward greater neutrality; and (c) away from summary condemnation of licensing restraints, and toward case-by-case analysis of competitive effects. Second, although there are differences between current U.S. and Japanese competition law, the new JFTC licensing Guidelines articulate an approach to technology licensing that is fundamentally consistent with that of the U.S. antitrust enforcement agencies. Third, perhaps the most enduring doctrinal contrast between Japanese and U.S. technology licensing antitrust lies in their differing approaches to asymmetries of bargaining power in licensing relationships. While U.S. antitrust is by no means indifferent to such concerns, the willingness to use antitrust law as a means of compensating for asymmetries of bargaining power in licensing transactions is a significantly more prominent aspect of Japanese competition law and enforcement policy. …