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Since 1990, patent applications by Americans has been increased approximately 330%, with a significant increase in applications in foreign countries. Domestic patent applications by Japanese account for a large percentage of the total, which has remained roughly level.

In 1996, Japan ranked first worldwide in number of patent registrations, with the U.S. ranking second.

When looking at the number of patents registered in foreign countries by Japanese and Americans in separate fields of technology, Japanese registered more patents in information storage devices, engines and electronic components but is behind Americans in pharmaceuticals, biotechnology, and petrochemicals ( Fig. 10 ).

Fig. 10: Foreign patents registered by Japanese and Americans

Products produced by Japanese corporations include those with high market share: semiconductor wafers (more than 75%), denitration catalysts, which are important in environmental conservation (100%), hydrogen absorbing alloys (100%), and plastic fiberoptics (100%), among others.

Although Japanese private enterprises in many sectors view their technological abilities as either superior to or on a competitive level with those of North America and Europe, the U.S. is seen as dominant in the information service industry, and the U.S. and Europe as dominant in pharmaceuticals, by an overwhelmingly large number of Japanese businesses.

Surveys by the Japan Federation of Economic Organizations (Keidanren) and others also show that the private sector sees itself as competitive in such industries as consumer electronics and appliances, nonferrous metals, semiconductor devices, and foodstuffs, but uncompetitive in software, paper and pulp, engineering, and pharmaceuticals ( Fig. 11 ).

Fig. 11: How companies evaluate the current and future competitiveness of their own technology and products (by industry)

Private enterprises indicate that future R&D investment will emphasize R&D relating to product technology ( Fig. 12 ), and that they intend to shorten product lead-in periods in order to speed up product changeovers and thereby assure competitiveness. As for human resources, there is a tendency to employ researchers in mid-career (i.e., those with experience at other companies, etc.) because of their proven abilities ( Fig. 13 ).

Fig. 12: The categories of research expenditures that private enterprises plan to increase over the coming 3 years

Fig. 13: Forecasts for researcher to be employed in the private sector next year

In order to overcome the fierce technological competition it faces, Japan's private sector must use R&D to create new and original products and services and even new industries.

To promote private sector R&D more over under current circumstances, various support measures have been implemented, including tax incentives for R&D investment and financial support for R&D at small and medium enterprises and venture companies.

Other examples are the revised tax deductions for increases in research expenditures and the small and medium enterprise technological innovation programs (Japan's version of SBIR) provided under the New Enterprise Creation Promotion Law, enacted on February 16, 1999.

As they place increasing emphasis on product technology R&D, the private sector is also placing greater expectations on research at universities and national research institutes, whose role is growing as a source of knowledge for new products and services and the seeds of new industries.

More specifically, universities are looked toward as a place of research that emphasizes on their own initiative, while the national research institutes are seen as places capable of hosting high-risk, high-cost research and research with the potential to generate economic rewards ( Fig. 14 ).

Fig 14: Private sector research cooperation with universities and national research institutes and the types of research that private enterprises believe universities and national research institutes should pursue

At the same time, as problems affecting the availability of the achievements of research at universities and national research institutes, the private sector cites the failure to specify the sources of research information and to release information in readily usable formats ( Fig. 15 ).

Fig. 15: Problems faced by private enterprises in acquiring research results from universities or national research institutes

Universities and national research institutes, however, are by no means being called on to pay excessive attention to the immediate needs of the private sector. What is important is that they vigorously pursue the kinds of activities that expand intellectual resources by creating new knowledge and combining existing knowledge. One example is the creation of new systems of knowledge in response to socioeconomic needs, which also include the needs of industry. Furthermore, efforts are needed to make the results of such endeavors apparent to industry, and to expedite the transfer of knowledge through active patenting.