The Ministry of Economy, Trade and Industry (METI) has launched a project for the securitization of patents owned by companies. This is to facilitate the use of their unused patents. It is said that there are about one million current patents in Japan, but only about one-third of them are now being used. The METI considers that the securitization of the unused company-owned patents would benefit the patent owners, potential users of these patents, and investors.
The basic structure of the securitization comprises:
(1) A special purpose company (SPC), which acts as a center of the network used for the securitization and issues securities to investors.
(2) Corporate patent holders, who agree with the SPC to transfer their patents and in turn receive consideration.
(3) Potential users of the patents, who agree with the SPC to take out a license and in turn pay royalties.
(4) Investors, who invest in the securitized patents and receive dividends.
Separately, an information center is to be set up to receive information from the SPC and to provide potential users with relevant information on the patents.
The SPC is a type of company to be formed subject to registration at the Financial Service Agency under the Law for the Fluidization of Specific Assets by A Special Purpose Company, which became effective in 1998. Originally the law was planned to be set up for the securitization of real estate, housing loans, etc., but later the scope of its application was expanded.
Vigorous publicity and coordination by the SPC and METI would be needed for this project to be successful. Also, the method of evaluating patents that is agreeable to the parties concerned would have to be sufficiently developed so that the patentees would cooperate with the SPC and so that the investors would invest their money.
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