Japan Is Paying Companies To Keep Sensitive Patents Secret, Report Says

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According to the Nikkei, which does not cite sources, Japan will compensate corporations for keeping secret patents with potential military applications under the proposed legislation.

According to the financial daily, the patents under consideration in the proposed economic security law will include technology that can aid in the development of nuclear weapons, such as uranium enrichment and cutting-edge innovations like quantum technology.

The applications will be screened by a panel made up of representatives from the Defence Ministry, the National Security Secretariat, and other agencies for the potential misuse by foreign actors, with disclosure restrictions estimated to be in the double digits. Based on comparable patents, the government will compensate nearly 20 years of licensing revenue. Licensing fees typically range from 3% to 5% of sales.

Because patents in Japan are routinely made public 18 months after filing, foreign governments and companies, as well as terrorists, have access to them.

Nippon Electric Company’s Facial Recognition System. ©Tokyo.org

The economic security legislation includes provisions for significant operators of vital infrastructures, such as telecommunication networks and power grids, as well as financial institutions, to assess equipment purchases.

As protection against potential national security concerns such as a hack that paralyzes a critical lifeline, the government will compel designated operators to submit plans before installing equipment and computer systems from third parties.

Toyota’s e-Pallete. ©Toyota.org

The examination will be conducted by the ministry or agency in charge of a certain industry to determine whether the supplier is influenced by foreign governments, which is a concern for some Chinese products. Equipment and computer systems that pose a risk to the operation’s stability will be refused.

The materials needed to assure the stable supply of semiconductors, pharmaceuticals, precious metal ores, and massive magnets are covered by the supply chain initiative. Companies in these industries will be eligible for government subsidies if they submit qualifying plans.

The legal framework is expected to be issued next month, with cabinet approval in February. The measures are set to take effect in fiscal year 2023.

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