Canon's sharp IPR strategy props up its development

Canon, the international digital equipment enterprise, was founded in 1937 as a camera manufacturer. It started out as a company with only a handful of employees, but over the course of its 70-year history, it became a multinational enterprise with 166,980 employees and sales revenue of just under $45 billion, ranking No 189 of Fortune's Global 500.

Canon is a technology-driven enterprise, and its R&D and IPR strategy have made a significant contribution to the company's development. In an exclusive interview, Nobuyoshi Tanaka, senior managing director, group executive of Corporate Intellectual Property & Legal Headquarters, shared with China Business Weekly the experience of Canon's IPR development and strategy.

Canon's IPR strategy encompasses the whole process of manufacturing, from the early stage of technology research to the market launch of a new product.

The process can be separated into three stages:

The first stage is R&D. In this stage, Canon innovates lots of new technologies and then picks up promising technologies and applies a few theory patents.

The second stage is the patent-nurture stage. In this process Canon applies more patents, especially the core patents, preparing the products' prototypes.

The third stage is the product manufacturing stage. It is the final step, including product design, reform or improvement, and diminishes the cost of production. The company needs to apply numerous patents for the final products to protect its core technologies.

"R&D work is not completed by the products put into market, but finished when the technology is protected by patents," said Tanaka.

Canon ranked No 3 of the top ten corporations receiving US patents in 2008, and registered trademarks in more than 180 countries and regions worldwide.

The process may take several years, even decades, to fulfill. For example, the technology of Canon's digital camera was researched and innovated in 1981, but the products came to customers around 1996.

Tanaka said there have to be two elements in place before a technology turns into a product on the market: market demand and surrounding technologies.

Canon draws some lessons from old failures. In the 1960s, Canon developed a technology called Synchro-reader, which sticks magnetic material in paper for recording, but this technology was too ahead of market demand and the product failed.

Another case Canon often illustrates to employees is the FLCD case. In 1991, FLCD, a Canon-developed LCD technology, performed poorly in the market. At that time the market was occupied by the TFT display device, but Canon wanted to do something different. "Sometimes you can not disregard the market to develop your own products," Tanaka said.

Basically, a new technology's appearance has a big relationship with the market, said Tanaka. But it is also relevant to its surrounding technologies or products. The Canon digital camera's core technology was invented by 1981, but the technologies matching the sensor technology were not mature enough in the 1980s. So the digital camera was launched into the market 20 years later after waiting for the proper surrounding technologies.

"From researching a technology to putting a product into market, there is a time gap; you need to wait for proper timing or chance to launch your products. Some companies give up their products before the chance comes, so the timing is very important," says Tanaka.

For an international enterprise, knowing how to transform technologies into products is not enough. IPR strategy is also significant.

Canon adopted a mechanism called "Centralized Intellectual Property Management" to manage its global IPR. The company has offices and companies all over the world; its American companies are managed by Canon USA; Europe, Russia, Africa and the Middle East by Canon Europe; Asia, except for Japan and Korea, by Canon (China); and Oceania by Canon Australia. Japan is handled by Canon Marketing Japan.

Huge branch numbers and complicated management for IPR are the major problems multinational companies have always encountered.

Compared with other enterprises' IPR management, Canon's Centralized Intellectual Property Management system does not assemble all the intellectual property research and development departments together; rather, research centers and factories are in different places, but the intellectual property department assigns its staff to those departments to manage Canon's IPR.

"They still belong to the intellectual property department, but our centralized management is different from other companies," said Tanaka.

Now, with technological development, a network has been formed. "As we all know, in the past the camera and the copier had no association with each other, but now image-processing equipment, copying machine, etc, are all associated with each other and formed networks, and communication technologies have provided us the technical conditions to combine this wide range of equipment together, which provides a feasibility for us to the centralize management model," said Tanaka.

Editor's note: The IPR Special is sponsored by the State Intellectual Property Office and published by China Business Weekly. To contact the Intellectual Property Office, the IPR Special hotlines are 8610-64995422 or 8610-64995826, and the e-mail address is ipr@chinadaily.com.cn.

(China Daily 05/18/2009 page11)