IP Strategy of HITACHI

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1 * IP Strategy of HITACHI April 7, 2004 Hitachi Ltd Executive Officer, General Manager of Intellectual Property Group Yasuo Sakuta *IP: Intellectual Property All Rights Reserved, Copyright C 2004, Hitachi, Ltd. 0

2 Basic Policy of Hitachi s IP Strategy Philosophy Creating IP value Basic Policy Establishment of IP portfolio to back up Hitachi, innovative technology company All Rights Reserved, Copyright C 2004, Hitachi, Ltd. 1

3 History of Hitachi s IP management Year Era Era of establishment of domestic independent development Era of introduction of technology and development of technology improved Era of maturity Era of IP IP management Advancement of Invention Activity Quantitative expansion of number of patents Quantity to quality of patents Globalization Number of Patent Application 2.0 (High-growth period) Technical Fee Established Patent Department in 1921 Founded In 1910 Domestic Application Foreign Application Technical Income Balance ten thousand (Unconsolidated Basis) All Rights Reserved, Copyright C 2004, Hitachi, Ltd. 2

4 Organization of Intellectual Property Group President & CEO [300 people] Intellectual Property Group 1 Affiliated Company 2 Overseas Liaison Offices (U.S., China) [7 branches] Corporate staff Division Planning, Patent Information, Business Administration IP Business Division License, Trademark, Copy rights 54 patent attorneys 5 US attorneys at law IP Development Division 9 Patent Divisions (Depending upon Products, technology) 200 people Neighborhood Support System for Invention Division All Rights Reserved, Copyright C 2004, Hitachi, Ltd. 3

5 IP Strategy Integrated with Business and R&D Strategy Medium-Term Management Plan (i.e.hitachi Plan II) New Era Lifeline Support Solutions Global Products Incorporating Advanced Technology Hitachi Group Frontier/ Platform Research Selection and Concentration Triune activity having strong will of conquering other companies as common recognition Business Strategy Conquer other companies IP (Patent) Strategy R&D Strategy All Rights Reserved, Copyright C 2004, Hitachi, Ltd. 4

6 Strengthening of Patent Portfolio (1) Creation Development R&D Road map for developments Extraction of core technology and differentiation technology Flagship Patent Activity Patent Portfolio Management Strategic Patent Activity 5FP according to rival for patent enforcement Patent portfolio construction to conquer other companies both in quality and quantity Mission of IP Group 5FP Five Fighting Patents All Rights Reserved, Copyright C 2004, Hitachi, Ltd. 5

7 Strengthening of Patent Portfolio (2) Case Storage field Aim for constructing No.1 patent portfolio in business field (1) SAN NAS Storage Solutions DLCM Data Life Cycle Management) Secure Remote Copy High Performance High Reliability Architecture (2) Hard Disk Drive (HDD) Perpendicular Recording Ubiquitous HDD All Rights Reserved, Copyright C 2004, Hitachi, Ltd. 6

8 Strategy of Patent applications Number of patent applications 10,000 8,000 6,000 Japan Transition of Domestic/Foreign Patent application Foreign (Unconsolidated Basis) (1) Quantity to quality (2) Globalization Effect of Renesas Technology Corp. establishment 4,000 2,000 0 unit FY1999 FY2000 FY2001 FY2002 FY2003 Europe Asia China US Strengthening of US and Chinese patent applications U.S. China Number of issued patents in FY2003:Third ranking (1,906 units) After FY2004: Retaining upper ranking by consolidated basis Number of patent applications in FY2006: 1,000 units All Rights Reserved, Copyright C 2004, Hitachi, Ltd. 7

9 Patent s Exploitation Strategy (Contribution to Business) (2) Cross licensing Multiple exploitations corresponding to (1) Royalty income business strategy (3) Strategic exploitation Contribution of order entry Refusal of license Alliance support All Rights Reserved, Copyright C 2004, Hitachi, Ltd. 8

10 IP Information Disclosure Purpose Disclosure of IP strength with technical strength Disclosure of consolidated IP strength Main disclosure items R&D strategy Patent strategy Bland strategy Time of disclosure May 2004 All Rights Reserved, Copyright C 2004, Hitachi, Ltd. 9

11 Hitachi Ltd. s HOSHO * and Award System * Incentive for inventors and compensation required by the Japanese Patent Law 35 HOSHO and Award System adequate one as a technology oriented manufacturer HOSHO system Outline (revised and separated from Award system in 1990) Patent application HOSHO, Patent Issue HOSHO (irrelevant to implementation) Implementation HOSHO compensation based upon the contribution to Hitachi business / year, without limitation Sales contribution part Licensing revenue contribution part (Including cross licensing contribution) Total amount : approx. 700 million yen / year Who accepts? : Inventor employees and retired ones (including heirs of them) Award System Strategic Patent Award Contribution of patent exploitation Award Patent Acquisition Award All Rights Reserved, Copyright C 2004, Hitachi, Ltd. 10

12 Technology to Back up Business, Emphasis on Invention 1. Research investment, improvement of research environment 2. Comprehensive measures to give incentive March 1, 2004, Invention Management Division was established and the division is reviewing the measures with a broad view of global standard 3. Fellow system 4. Technology award from President All Rights Reserved, Copyright C 2004, Hitachi, Ltd. 11

13 The IP excellent company The following part is extracted from the Japan Patent Office Annual Report 2003* *Japanese version of the report Part III The situation of the intellectual property activity in our country Chapter1 The intellectual property strategy and the industrial competitive power 4 The IP excellent company An example of the operation of acquisition and management of IP in a company Hitachi, Ltd. positions IP as an engine of their business activities, and makes an effort to excavate and develop inventions and exploit patents strategically. Based upon the clear strategy "to acquire the strategic patents which are inevitable and imperative to be used by other companies", Hitachi acquires patents through the process of polishing up inventions of patent applications before being filed by joint operation of R&D division and IP division. Moreover, Hitachi exploits acquired patents effectively according to three roles, the contribution to technical income of IP, exploitation of cross licensing, and exclusive exploitation. All Rights Reserved, Copyright C 2004, Hitachi, Ltd. 12