I should like to begin by offering my hearty congratulations on the founding of the Industrial Property Arbitration Center and expressing my best wishes for a smooth and sound development. I understand that this Center specializes in industrial property cases, to the exclusion of other intellectual property cases, such as copyright or unfair competition cases. In the 21st century the necessity of such distinction will dwindle with the diminishing difference between copyright law and industrial property law or law against unfair competition. Today, therefore, I am going to take up intellectual property in general from a broader point of view.

We have already agencies for general arbitration. The fact that nevertheless a special one for industrial property has been newly created may be accounted for by the characteristics that distinguish cases involving intellectual property including industrial property from ordinary cases. A consideration of the principles of intellectual property will furnish a theoretical basis for the arbitration center just founded. My talk today will treat intellectual property with special emphasis on its positioning and its distinctive features, though it has little to do directly with arbitration.

What is intellectual property at all? This is the question to be asked and answered before giving a talk on 21st century intellectual property.

We may say that intellectual property law is, in the ultimate analysis, law for the protection of proprietary information. There are several conceivable modes of protecting proprietary information. Under the current legal system, we have the Unfair Competition Prevention Law as a general law in an ideal form, to which as special laws we have certain branches of intellectual property law like the Patent Law, the Copyright Law and others, although these expressions are not quite accurate. As established protective laws these two are of higher importance in that they protect information by a sort of in rem effect like that of a proprietary right by assimilating it to a tangible thing.

Let me illustrate this by the Patent Law. It is a law for the protection of technical information. Information in itself lacks so-called "exclusivity of consumption," so that as a rule it can be used by anyone at any place. In other words, even if certain information is being used by someone, it can be used by another at the same time. In this sense, information is in the public domain and originally could be freely imitated, setting aside its ethical aspect. As a consequence, formerly a person could imitate with impunity technology developed by another.

If, however, the way some information is acquired is improper, it will be questioned, but information itself cannot be monopolized. Once information is known to others, there was no stopping their use.. As a matter of fact one can monopolize it only by keeping it secret. In former days, secret information was recorded in rolls to be handed down from father to son and jealously guarded within a family.

But a large proportion of our information cannot be kept secret. Especially nowadays, as soon as some goods are placed on the market, the related technical information will lose its confidentiality.. Such information is on the increase, and is often of very high proprietary value. If law should leave such information in the public domain without doing anything about it, all newly created information will instantly be imitated, only to discourage the incentive to create. The result will be that under such circumstances information can no longer well function as an asset. To be short, inimitable information will be valuable as property, while information easy to imitate is meaningless as such.

Naturally with industrial and economic development, a cry has arisen for a legal protection of information, mainly technical, that can function as economic property, especially information that cannot be kept secret. If information created at the expense of funds and effort is used by a third person without permission,-- or he gets a free ride,-- a second runner only reaps profits at the sacrifice of the first runner. In such circumstances, the incentive to create will be lost, and industrial development will be hampered. As a consequence the felt need of protecting certain kinds of information against free riding has brought forth intellectual property law in a concrete form such as the Patent Law and the Copyright Law. Reversely stated, the establishment of intellectual property law has opened the way for exclusivity of information.

It should be noted that not all free rides are forbidden by intellectual property law. A free ride (imitation) has its own merits, so that a sweeping suppression of free rides is unwise and even impossible.

Our conduct, whether in invention or in science, consists mostly of acts of imitation. It is by adding an element of creation to imitation that we create a new product. Nothing is ever created totally from scratch.
It is unreasonable to forbid imitation in general, since it would keep society stagnant and impede progress. A general prohibition of imitation is by no means possible, seeing that, even in the Edo period, when all innovations were outlawed, many inventions were made. What then we have to do is to sort out permissible free rides from impermissible ones.

Such information as can develop unaided needs no legal privilege of monopoly. It is even more so with such information as is likely to do more harm if monopolized. The necessary and sufficient thing we have to do in intellectual property law is to make special legislation about information which needs protection, in other words, which will contribute to social welfare if protected. Instead of protecting information or prohibiting imitation in a sweeping way, we should make law in a patchwork fashion according to the needs of society. And this is indeed what we are doing in intellectual property law at the present moment.

To take an illustration, service, even if it is a creation of the human mind, is not now protected as such. The manner of treating hotel guests, for instance, however ingenious, is not legally protected. Anyone is legally free to inspect other hotels and adopt their good points. The manner of treating guests, if reduced to a manual and kept secret, may in some cases be protected as a trade secret. But that is another matter.

There are many other mental creations placed outside legal protection. The idea of pizza delivery service, the mode of exhibiting goods, new ways of jumping in gymnastic exercises-- this list could be extended indefinitely. With regard to information in these fields, a benign effect on development can be expected not so much from the policy of monopoly as from that of free competition. In other words, such information is not protected, simply because there is no particular need for it. In any case, intellectual property law limits its protection to certain information that particularly needs it badly.

To give protection to information that particularly needs it means that information now outside protection may need it if the social conditions change. For instance, the protection of data in a database is a world issue of the day. It was only yesterday that such data were mere facts for which there was scarcely any demand for protection.

With the progress of digital technology, however, databases have advanced, and collection and processing of data to be stored there have come to entail an enormous expense of money. On the other hand, free riding, or copying (in this context), is made easy by digital technology, with the result that unless free riding is forbidden, a vast amount of money invested in a database will not be recovered. Hence this worldwide cry for the protection of databases. Failure to suppress free riding on databases will discourage investments in databases and blast our hope for development in this area, when it is certain that databases will prove to be of vital importance in the 21st century. This will explain the necessity of such protective legislation.

Among other fields that are likewise outside of legal protection or dubiously within it are such things as characters, typefaces, printer's right, and many others (e. g., folklore, biological resources).

As seen above, there is no theoretical limit to the range of intellectual property, and its extent of protection will vary with the developments of the times or according to the needs of the times. We can easily imagine that the 21st century society will become even more complex, and with it the objective range of intellectual property will expand. This fact in itself is not particularly questionable from the legal point of view except the propriety of such expansion.. This means that intellectual property law, as distinct from the law of proprietorship or ownership of tangible things, is characterized by fairly strong policy orientation.

It should be noted, however, that even if the range of intellectual property is expanded, such expansion, in my opinion, should not be allowed to go beyond intellectual property in those fields in which development of information will seriously suffer from lack of monopoly. Establishment of intellectual property in a field where information will develop of itself without benefit of monopoly will not only fail to encourage development of the society's technology, but do harm. It can be foreseen that a monopoly so granted will cause unjust profits to accumulate in the hands of certain specific persons.

Thus there is no theoretical limit to the range of intellectual property. Introduction of something heterogeneous like a database into intellectual property law may possibly transform the theoretical framework of intellectual property, with the result that it will become academically necessary to make a theoretical examination of the concept of intellectual property.

Speaking in concrete terms, intellectual property like a patent or a copyright has so far had a basic framework in which protection is afforded to an creation of the human mind. A product devoid of creativity has never been protected, no matter how much sweat of the brow may have rolled down, or how much labor and money
may have gone into it.

The Feist decision of the United States Supreme Court, for instance, held that a telephone directory in alphabetical order was not eligible for copyright protection for want of creativity.

The protection of data in a database is now a matter of worldwide controversy. Creativity as a requirement does not come into question. Instead it is only the logic of investment that runs through all discussions. Protection of sheer effort or "the sweat of the brow" has been unknown to the traditional framework of intellectual property law. For all that, it may have to admit such data into that framework, if necessity compels it.

In the future, not only creators of information, but also transmitters or mediators may find a place in intellectual property law. It will then become necessary, as stated above, to construct anew a coherent fundamental theory of what is intellectual property law. "Intellectual" may cease to be the right word for it. This is certainly a hard task that will challenge the 21st century's learned circle in intellectual property law.

It is said that, with the increasing importance of information, the 21st century will see a shift from the age of things to the age of information. It should be noted, however, that this does not mean that things will not be important any longer. Production of things will be no less important in the next century. Information, side by side with things, will grow in importance, -- in relative importance.

In any case, there is no doubt that such growing importance of information in the next century will be due largely to digital technology. When this technology arrived on the scene, information had indeed attained well recognized importance. But the development of digital technology has turned information's growth in importance into a qualitative change.

Digital technology has not simply made an epoch making change in information as an asset, but also introduced a great innovation into information in general. Indeed it has a latent possibility of carrying out a radical social revolution.
In digital technology, all information (speaking in concrete terms, texts, sounds, still pictures, moving pictures) is capable of being stored, processed or transmitted by the unitary method of 0 and 1. Unification by means of digital technology will render it possible to merge hitherto distinct media like publishing, newspapers, records, and the like. It will be made easier to introduce into this field such lines of business as have so far had little to do with information. Merger by digital technology will be seen in every field.

On the other hand, there is no denying that this situation tends to facilitate monopolization of information by a giant enterprise, and to produce problems involving competition law. But I do not think it proper to leave all such problems to competition law people. Those in information-related law will have to do something about them, too.

Electronic money and electronic commerce are about to bring about an epoch making change in the form of business transactions. A fundamental conceptual modification may be needed in problems of privacy and information disclosure. Digital technology is younger than these two things, but its appearance has aggrandized them in not only quantitative but also in qualitative terms.. At present an infringement of privacy through Internet assumes an entirely different aspect from one through traditional media.

It may further be pointed out that in the field of intellectual property, the strengthened protection of information or the oligopoly of information consequent on digitalization has created a possibility that cases will arise which may conflict with the basic principles of modern law such as the right to know, academic freedom, etc. Hitherto a monopoly of specific information has been granted by the Copyright Law or the Patent Law to meet social or industrial requirements, but care has been taken by these laws to prevent conflict with the basic principles of modern law (for instance, a use for test or research purposes is exempt from the effect of a patent as is usually the case with university uses). Information protection law rests on the principle: that information is basically open to free use, except that a monopoly is granted only in case of a compelling need and within a necessary scope.

Under traditional law, it was possible to diversify legal control according to the respective kinds of information.. But the development of digital technology and consequent unification of all kinds of information tend to make such meticulously thought out legal control increasingly difficult.. For example, suppose a removal of copy protection of digital information or a decipherment of a digitally coded message is forbidden, there is a possibility of protecting copyrighted and uncopyrighted information indiscriminately, or of regulating all modes of utilizing information (e. g., for a private use, for an academic study, etc.).

What is more, the development of digital technology has caused the technology of information control to make progress. Aided by the latter technology, parties to a contract can now agree to place themselves de facto outside the regulation of intellectual property law. From now on we shall have to bear these technologies in mind when we attempt to reconcile the requirement of strengthened protection of information and the requirement of the right to know, academic freedom and the like.

Thus the system of intellectual property law needs designing fit for digital technology amid the huge current of the times.

Now we are right in the midst of a huge transition. I am wondering what metamorphosis the 21st century has in store for intellectual property. But it is beyond my power of prediction to tell in exact terms what that would be like.

But we may say that anyway the value of information will make a remarkable rise. Valuable assets are naturally exposed to so much the more frequent infringements. It will give rise to a cry for an expansion and strengthening of intellectual property law. That will be done by amending existing law or by making new law. In either case, law will certainly tend to be strengthened both quantitatively and qualitatively so as to keep up with the times. "Pro patent" is now the catchword for this. In these days people talk much about science and technology as the basis on which to establish a state. These two things must be founded on strengthened intellectual property law.

On the other hand, I do not think that all we have to do is to strengthen intellectual property law. Since it confers a right to monopolize information, we must expect that a monopoly will be attended by evils. Foreseeably a monopoly of information will frequently do much more harm than that of a thing. Some people believe that is not a problem of intellectual property law, but of competition law. But intellectual property law itself is a markedly policy-oriented branch of law, so that its designing should be done in such a way that it partakes something of competition law. We have to explore for a point where we can harmonize the interest of a right owner and the interest of society in general, or preserving the incentive to create and keeping the development of society unhampered.

In designing intellectual property law, we should have two opposite axes of orientation, the axis of strengthening of protection and that of its restraint. In this field it often happens that amendment or enactment of an act is made under powerful pressure from business organizations. In designing law we must weigh interests from the viewpoint of public interest, always heedful of the voiceless voice. In short, no imitation of information should be prohibited beyond the bounds of need, always with precautions against excesses.

Designing intellectual property law is a difficult job in that it should be done not only from the domestic, but also always from the international, point of view. Anyway, we have to bear in mind "within a necessary scope."

On the other hand, for those which need protection, it should be positively ensured that protection afforded will really be effective. A law full of loopholes or a right only in name will loosen a man's notion of law or cause a moral hazard.

In the last analysis, it is important that the scope of protection should be just and proper. For those which need protection, the real effectiveness of rights in acquisition as well as in exercise should be the objective to be achieved. I believe this is the basic attitude we should adopt in organizing an integral body of intellectual property law for the 21st century.

(Lecture given at the Inaugural General Meeting of the Industrial Property Arbitration Center on March 26, 1998)