June 28, 2019
The Japan Patent Office (JPO) prepared a guidebook as a compilation to present key points that venture capitalists should note in assessing the intellectual property (IP) owned by venture businesses (VBs) and supporting VBs in drafting and conducting IP strategies. The guidebook presents in a streamlined manner pitfalls into which venture capitalist are likely to fall, explaining such pitfalls by investment round and referring to case examples inside and outside Japan.
Advantages that venture capitalists can gain from appropriate assessment of IP owned by VBs and proactive provision of support measures for them are not limited to helping VBs protect their competitive advantage. Through such assessment and provision, venture capitalists are able to increase the number of options for business growth and exit strategies and to enhance the corporate value of VBs, resulting in enhancement of investment returns to the maximum extent possible. Such venture capitalists serve as supporters of VBs in drafting and implementing IP strategies from two perspectives of providing funds and advice.
Against this background, the JPO prepared the guidebook based on its passion for encouraging venture capitalists to further support VBs’ IP strategies.
2. Characteristics of the guidebook
Key points that VBs should note in developing IP strategies change depending on investment rounds. The guidebook presents a compilation of investment round-based pitfalls in the field of IP into which VBs and their capitalists are likely to fall as well as measures for addressing such pitfalls. Moreover, the guidebook also offers a compilation of pitfalls into which corporate venture capitals are likely to fall as well as measures for addressing such pitfalls.
The guidebook is characterized by the following three points:
- The first guidebook prepared for venture capitalists to help them in assessing IP owned by VBs and providing support to them;
- Streamlined compilation of pitfalls into which venture capitalists are likely to fall, referring to the case examples of failures that venture capitalists experienced involving investment;
The guidebook offers case examples of the past failures from which venture capitalists can learn about investment, including: a case example where a VB failed to obtain a fundamental patent, the research results about which a venture capitalist considered promising, since the VB had publicized a paper on the research results on the date before the VB filed an application for the patent; and a case example where a VB, in which a venture capitalist invested, received a warning letter on its IP infringement just before the VB’s initial public offering (IPO) and the VB was requested to pay a large amount of compensation of damages.
- Descriptions of eight leading case examples of measures for supporting VBs in overseas countries
The guidebook also describes successful case examples in overseas countries, such as the case where a VB, which has obtained a patent by receiving the IP support from a venture capital, was acquired by a large company and the venture capital gained large returns.
3. Website on which the guidebook is provided
The guidebook are provided on an IP portal website for startups titled “IP Base.”
Division in Charge
Policy Planning and Research Division, Policy Planning and Coordination Department, Japan Patent Office