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“Model Contracts Ver.1.0 for Promoting Open Innovation between R&D-based Startups and Business Entities” Compiled

June 30, 2020

Aiming to promote collaboration between R&D-based startups and business entities, the Ministry of Economy, Trade and Industry (METI) and the Japan Patent Office (JPO) compiled “Model Contracts ver.1.0,”* a series of guides explaining key points that such startups and business entities should note in advancing negotiations for joint research contracts or license contracts.

1. Background

As one of the reasons for difficulties in disseminating open innovation in Japan, some point out that startups lack legal knowledge when they intend to embark on joint research with companies. To address this situation, METI and the JPO formulated “Model Contracts ver.1.0” as a tool to fill the gap of legal knowledge between R&D-based startups and companies and to promote open innovation between them.

*Note: METI and the JPO inaugurated a committee of experts in such fields as intellectual property and legal affairs as members, and the committee formulated “Model Contracts ver.1.0.” For details of the members and other items, see page 3 of the report accessible through the link titled “Details of the release of the Model Contracts ver.1.0” below.

2. Details and key points of the Model Contracts ver.1.0

The Model Contracts ver.1.0 explain specific measures for addressing the case examples of issues which have been uncovered in an interim report of the “Survey on the Current State of Trade Practices by Startups,” which was conducted by the Japan Fair Trade Commission (JFTC), and also clarifies key points which are expected to become issues in advancing contract negotiations.

METI and the JPO expect that the Model Contracts ver.1.0 will help companies and startups to communicate more appropriately, succeed in open innovation and maximize the business value that they have created.

There are three major characteristics of the Model Contracts ver. 1.0 as below.

  1. They present model contracts which are required in chronological order in advancing processes for collaboration for joint R&D concerning: confidentiality contracts, proof of concept (PoC) contracts, joint R&D contracts and license contracts;
  2. They provide opportunities for readers to learn vital points of negotiations by testing potential trade case examples with terms and conditions of contracts; and
  3. They explain meanings of contract texts with supplementary clause-by-clause explanations, thereby offering more information to help readers better understand the business risks that contracts include, e.g., legal risks that parties may face if they lack understanding of such contracts.

3. Announcement of materials

4. Future schedule

METI and the JPO will revise and modify the Model Contracts ver. 1.0 if necessary based on the details of the “Report on the Current State,” which the JFTC is scheduled to compile by streamlining assessment results and other opinions in terms of the Antimonopoly Act, which are outcomes of the JFTC’s ongoing survey on trade practices of startups.

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