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Intellectual property (IP) is a key element of Hitachi's business strategy. We are developing a global patent portfolio and promoting IP activities focusing on Social Innovation Business. We are also conducting anti-counterfeiting activities to protect Hitachi's brand, and are working on international standardization to expand markets in our business areas.
It is important to build a global patent portfolio to engage effectively and competitively in the global marketplace. We have worked to increase our patent application ratio outside Japan from 47 percent in fiscal 2009 to 55 percent by fiscal 2012. In fiscal 2011, this ratio reached 55 percent; we successfully achieved our goal a year early. Specifically, we are increasing patents and patent applications in China and emerging countries across Asia. To obtain patents efficiently in several countries or regions, we file international patent applications (PCT: Patent Cooperation Treaty).
To support our business strategy, we focus on the Social Innovation Business in our IP activities. Examples of our focuse on this technology:
We believe that protecting our business by IP is crucial. We are building a patent portfolio focusing on technologies consistent with Hitachi's strengths from the standpoints of market needs and technology trends. With this patent portfolio, we can prevent other companies from using our technologies without our authorization and protect our business by differentiating our products and services. In some cases, we use our patent portfolio to have cross-licensing agreements with other companies to promote smooth business activities without the constraint of IPs from those companies.
We motivate employees on the R&D frontlines with a reward system for new inventions. To ensure that the reward system is operated fairly and transparently, we set standards to evaluate inventions and disclose these standards to employees. We also have a mechanism for receiving inquiries for paid rewards and opinions on the reward system.
For example, we have developed an invention information system to promote communication between inventors and business divisions using their inventions. Through this system, inventors can ask the business divisions for patent implementation status and check the evaluation standards used to calculate the rewards for their inventions.
In addition, from fiscal 2005, we have given awards to the top 100 inventors. In year 2006, we also awarded the top 50 young inventors (under 35 years old) who received patent application rewards based on patent applications filed within five years of joining Hitachi.
We respect IP rights (IPRs) of others, as we expect them to respect ours. We follow in-house rules*1 and conduct preliminary searches of others' patents before undertaking R&D on new products and technologies to avoid IPR infringements. For IPRs that belong to others, we obtain licenses from IPR holders before we use them. If any company is found to have infringed our IPRs, we encourage them to acquire the necessary license, and will take legal action, if necessary.
To maintain and increase Hitachi's brand value, we have a rigorous regime against activities that infringe Hitachi's trademark rights, such as making and selling counterfeit goods carrying the Hitachi brand and illegally applying for or registering trademarks similar to the Hitachi brand. To ensure Hitachi's further growth as a global company, we need to use our trademark rights to protect our brand against infringements by third parties. The Hitachi brand is now registered as a trademark in more than 200 countries and regions.
The usual anti-counterfeit action is to send warnings and/or report to government agencies based on legal protection against manufacturers, distributors, wholesalers and vendors who infringe Hitachi's trademark rights. Recognizing, however, that the supply of counterfeit products exists only where there is demand, we are also educating consumers about counterfeit products, to attack counterfeit products from both the supply and demand sides.
Cooperation from local law enforcement and government agencies is essential in dealing with infringements. We contact Japan's Ministry of Economy, Trade and Industry (METI), Ministry of Foreign Affairs and other governmental bodies, as well as law enforcement agencies, governments and authorities in other countries and regions. We also hold seminars and workshops in order to exchange information and views seeking their cooperation for our anti-counterfeit activities.
We actively support international standardization, and we contribute to standardization organizations. For example, we have one employee who is the IEC (International Electrotechnical Commission) vice-president. We also help to establish international standards for technologies developed in Japan, such as biometrics and encryption.
For example, as Technical Committee Chairman at Ecma, we took a leadership position to standardize interfaces for coordinated control of IT equipment and air conditioning in environmentally conscious data centers. An Ecma standard "Smart Data Center Resource Monitoring and Control" was issued in December 2011. For smart cities, as a member of the International Standard Innovation Technology Research Association, we worked to establish a new subcommittee, TC268 SC1 "Smart Urban Infrastructure Metrics," in the International Standardization Organization (ISO) in February 2012.
Hitachi's standardization performance received a METI Minister's Award at METI's Industrial Standardization Awards in fiscal 2011.
We drive IPR initiatives forward by cultivating employees who are highly skilled and globally aware. As of April 1, 2012, our Intellectual Property Group had 99 registered patent attorneys and six lawyers registered in the US and the UK. Every year, we send four to six employees from our Intellectual Property Group to patent and law offices in the US and Europe for internships.