small and medium enterprises empowerment through ...

RESEARCH REPORT WIPO LO NG TERM FELLO WSH IP PRO G RAM UNDER JAPAN FUNDS-IN-TRUS T 2008-2009

SMALL AND MEDIUM ENTERPRISES EMPOWERMENT THROUGH INCENTIVES SYSTEM OF INTELLECTUAL PROPERTY RIGHT BY JAPAN PATENT OFFICE by Juldin Bahrian syah Directorate Gener al of IP R Rep ublic of In don esia under Professor Supervision of

Yoshitoshi Tanaka

Ma nagement of Technology Department To kyo I nstitute of Technology

RESEARCH REPORT by Juldin Bah rian syah

ABSTRACT

This research is purpo sed to capture Japan Sm all Medium Enterprises’ (SMEs) attitud e, relating to incentive system of Japan Patent Office (JPO). Japan government has construct supporting system for SMEs in va riou s field. These a re distribu ted am ong governm ental organisation, such as JPO, and funded in differen t schemes. Resea rch er will gather information about the effectiven ess that in centive system of JPO. They are fee redu ction, supporting unit, and accelerated examination system. Hen ce, researcher ha s reference to deplo y such system in Indonesia. Key wor ds: SMEs, em powerm ent, Japan, Japan Patent Office, in centive system , fee reduction, supporting unit, accelerated ex am ination system

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FOREWORDS “ふでわけんよりもつよし”. There is a sayin g in Jap an (koto wa za) that means a pen is more powerf ul than a swor d. Researcher ackno wledges its tr uth. Whenever the vio lation to be a m ean to chan ge, it will always create destruction rather than perfection. A tiny contribution of scholar wr itings that is heading to a better world. This progr am has giv en a new horizon. Japanese SMEs have taught how Japan achiev es this pr esent. Professionalism, har d workin g, and many ethic codes lead businessm an help Jap an economic to be gigantic co untry. Those things are aware its po wer by people, but lack in im plem entation. This research try to descr ibe what Japan Governm ent’s effort in em powerin g SMEs, and evaluate a part of it—incentives by Jap an Patent Office (JPO). Six months is never eno ugh to absor b all researcher needs. Durin g this p eriod, researcher got m uch fr uitful knowledge from various activities. Researching which is invo lvin g exploring, discussion with experts, interviewin g, questioning, and interactin g with my professor—Professor Yoshitoshi Tanaka—with his lab members, enr ich IP matters an d human relationship of Japan ese. My class of Professor Kumiko Miyazaki an d Professor Kun iko Higa sho wed differ ent approach in subjects and teach a lot. Participating in some trainin g co ur ses also deepened r esearch er’s kno wledge in IP. After all, research er has to gratef ul to m any persons and or ganizations upon this program. High ly appreciation to WIPO and JPO which held this pro gram; my office—Directorate General of Intellectual Property Rights which had or dered to learn and staffs; my Professor—Professor Yoshitoshi Tanaka which teach me many things, you will alway s be m y professor; JP O officials an d International Affair s Division staff s, esp ecially Mr. Miur a, Ms. Mari Mori, Ms. Fusako Ak utsu, who assisted me in m any issues; APIC staffs, esp ecially Mr. Toshiyasu Matsutani, Mr. Masak azu Yokoyam a, and Ms. Yukiko Koyan agi, who became my hand and foot dur in g this pro gram; my friends in Tokyo Institute of

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RESEARCH REPORT by Juldin Bah rian syah Technology who in spir ed me in class an d interaction; m y trainin g cour ses frien ds who sp ent am azin g time during the cour ses, yo u will always be my frien d; my program fellas, Mr. Babu Nediy am parambath u an d Ms. Ronil Emm avi Remo quillo who became brother and sister, and it will always be. Lastly, this r eport is dedicated to anybo dy who concern in Small an d Medium Enterprises. As a comparison study, this report may give som e information. Nevertheless, this research’ s weakn esses will become opportun ity to improve science. Research er is alway s ready to discuss and sh are information regar ding this research. Research er can be contacted at juldin_ bahrian syah@y ahoo.com September 2009 Juldin Bahriansyah

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TABLE OF CONTENTS ABST RACT.......................................................................................................... ii FOREWORDS ..................................................................................................... iii TA BLE OF CONTENTS................................................................................v LIST OF FIGURES ...................................................................................... vii LIST OF TA BLES ....................................................................................... viii AC KNOWLDGEMENT...................................................................................x CHAPTER 1: INTRODUCTION.................................................................1 1.1. Back gro und ..............................................................................................1 1.2. Objectives of Research.............................................................................3 1.3. Statem ent of Problem s .............................................................................3 1.4. Limitations and Delimitations..................................................................3 1.5. Hypothesis an d sub hypothesis ................................................................4 1.6. Abbreviations ...........................................................................................6 CHAPTER 2: LITER ATUR E STUDIES AND METHOD OLOGY ...8 2.1. Competition Theories...............................................................................8 2.2. Incentive Theories....................................................................................9 2.3. Sampling ................................................................................................11 2.4. Data Collecting ......................................................................................12 2.5. Im plementation ......................................................................................17 CHAPTER 3: SMES PR OFILE.................................................................21 3.1. Indonesia SMEs .....................................................................................23 3.2. Incentive Sy stem for SMEs Provided by Directorate General of IPR ...26 3.3. Japan SMEs............................................................................................26 3.4. Incentive Sy stem for Japan SMEs .........................................................29 3.4.1. Fee Structure ...................................................................................31 3.4.2. Acceler ated Examination Sy stem ...................................................33 3.4.3. Supporting Unit ...............................................................................35 CHAPTER 4: METHOD OLOGY IMPLEMENTATION AND ANALYSIS .......................................................................................................38 4.1. Respondents Profile ...............................................................................38 4.2. Interview Analy sis .................................................................................39 4.3. Questionnaire Interpretation ..................................................................43 CHAPTER 5: C ONC LUSION....................................................................55 5.1. SMEs Busin ess, Innovation and Intellect ual Property Process..............55 5.2. Recomm endations ..................................................................................57 BI BLI OGRAP HY ................................................................................................60 ANNEX 1: INTER VIEW REPORT .......... Error! Bookm ark not defined. ANNEX 2: LOCA L GOV ER NMENT INCENTIVE SYSTEM IN SUPPOR TING SMES R EGAR DING IP SY STEM FOR FISC AL YEAR 2009 ..................................................... Error! Bookm ark not defined.

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LIST OF FIGURES [ TITL E]

[PAG E]

Figure ①Po rter’s Five Fo rce s of Competitive Po sition ............................ 9 Figure ②Issues in Management at Overseas Bases .............................. 11 Figure ③Questions blueprint ...................................................................... 15 Figure ④Blueprint of Em powering SM Es ................................................ 25 Figure ⑤Compe titive advantages in comparison with competitors ... 27 Figure ⑥Objective s of Capital Inve stment............................................... 27 Figure ⑦Most impo rtant management resource s .................................. 28 Figure ⑧Subcontracting and outsourcing activities .............................. 28 Figure ⑨Number of enterprises by industry and size ........................... 29 Figure ⑩SM Es Suppo rting Grand Design by JPO ................................. 29 Figure ⑪SM Es Prefecture Supporting Grand Design by JPO ............ 30 Figure ⑫Claiming Re ductio n Fee Procedure ........................................... 32 Figure ⑬Accele rate d Examination System M ilestones......................... 34 Figure ⑭SM Es Busine ss Flowchart........................................................... 55 Figure ⑮SWOT Analysis .............................................................................. 56 Figure ⑯Indebt System ................................................................................ 57

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LIST OF TABLES [ TITL E]

[PAG E]

Table 1. Pre determine d Respondents ........................................................ 19 Table 2. SMEs Definition in Indone sia ...................................................... 21 Table 3. SMEs Definition in Europe an Community ............................... 22 Table 4. SMEs Definition in Japan............................................................. 22 Table 5. Com pariso n SMEs Def inition with G DP per Capita .............. 23 Table 6. MSMEs GDP Co ntribution pe r Sectors ( Perce nt) 2006-200724 Table 7. Annuity fee ....................................................................................... 31 Table 8. Registratio n fee ............................................................................... 31 Table 9. Renewal re gistration fee ............................................................... 31 Table 10. JPO Assistance for SMEs fo r Fiscal Ye ar 2008 ..................... 35 Table 11. SM Es re spond that IP is importance for their business...... 43 Table 12. SM Es re spond that they nee d IP prote ction for their business............................................................................................................. 44 Table 13. SM Es re spond that they always pay attention to new inform ation regarding IP .............................................................................. 44 Table 14. SM Es re spond that they look for IP inform ation by the ir initiative ............................................................................................................ 44 Table 15. SM Es re spond that IP information is easy to ge t ................. 45 Table 16. SM Es re spond that they know about available fee incentives for IP applicatio n provide d by Japan Patent Office................................ 45 Table 17. SM Es re spond that they always use such fee ince ntives fo r the ir IP applications....................................................................................... 46 Table 18. SM Es re spond that the fee incentives are easy to claim (simple, sho rtly, and fewer conditions) ...................................................... 46 Table 19. SM Es re spond that the current fee incentives are adequate ............................................................................................................................. 46 Table 20. SM Es re spond that they know about available supporting unit fo r SMEs of Japan Patent Office ........................................................ 47

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Table 21. SM Es re spond that the supporting unit is easy to acce ss (by pho ne, internet, or even visit) ...................................................................... 47 Table 22. SM Es re spond that they are convinced that such supporting unit’s capability (e xpert, infrastructure) ................................................... 47 Table 23. SM Es re spond that they always ask such advice or assistance f rom suppo rting unit re garding the ir IP applicatio n ......... 48 Table 24. SM Es re spond that the advices are useful for them............. 48 Table 25. SM Es re spond that they know about available accelerated examination system for IP application pro vided by Japan Patent Office .................................................................................................................. 49 Table 26. SM Es re spond that they always use such acce lerate d examination system for their IP applications .......................................... 49 Table 27. SM Es re spond that the accele rated examination is easy to claim (simple , shortly, and fewer co nditions) ........................................... 49 Table 28. SM Es re spond that they can start immediate ly to e xplo it the ir IP using acce lerated examination system....................................... 50 Table 29. SM Es re spond that they feel more secure d for my business due to accelerate d examination system ..................................................... 50 Table 30. SM Es re spond that the current IP incentives suppo rt their business............................................................................................................. 50 Table 31. SM Es re spond that the supporting units support their business............................................................................................................. 51 Table 32. SM Es re spond that the accele rated examination proce ss supports their business ................................................................................. 51 Table 33. SM Es re spond that IP pro tection guarantee the ir business to run safer ....................................................................................................... 51 Table 34. Deviation......................................................................................... 52 Table 35. Consistency Measurement.......................................................... 53

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ACKNOWLDGEMENT A long surviving to achieve some extent self-actualizations was possible because of

My wife and my angel, for loving and understanding My parent, for m aking m e like this My super ordinates, for trusting in My aspirators, for energizing and giving spirit

who have supported m e when everything seems turning down……

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When I w as young and free and my imagination had no lim its, I dreamed of changing the w orld. As I grew older and w iser, I discovered the w orld w ould not change, so I shortened m y sights somewhat and decided to change only my country. But it, too, seemed immovable. As I grew into my twilight years, in one last desperate attempt, I settled for changing only my family, those closest to me, but alas, they w ould have none of it.

And now , as I lie on my deathbed, I suddenly realize: If I had only changed myself first, then by example I would have changed m y family, and finally lead the change of the w orld….

⎡A NONIMOUS⎦

RESEARCH REPORT by Juldin Bahrian syah

CHAPTER 1: INTRODUCTION

1.1.Background

P

resident of Rep ublic of Indonesia— Susilo Bambang Yudhoyono—at independence day com memoration 17th August 2008, stated that new

national development strategy in

form of clusters, in cludin g

SMEs

em powerm ent cluster. BAPPENAS (National Dev elopm ent Plannin g Body) then constructed Mid-Lon g Term Developm ent Plannin g 2010-2014. The basis on conglomerates as previo us dev elopment (as Spill Over Theory) is left beh ind. Government realizes that developm ent failure so far due to disobeyin g of cooperatives an d SMEs. The fact durin g 1998 crisis in Indonesia, SMEs were able to survive an d dr ive national economic activities. Other wise, big enterprises an d conglomerates were co laps an d some run away with bail o ut fun d. This paradigm was extracted in formin g of Innovation Center of SMEs (I CSM Es) through Decr ee of Coordinator Ministry of Econom y no 47 of 2008. I CSM Es designed as cataly st to dev elop sm all and medium-scale business units in Indonesia. As a new policy, it needs great efforts and excellent plannin gs. Directorate General of IPR (DGIPR)—as prom inent part of this bo dy—bear an heavy expectation, which DGIPR is dem anded to significant and actively contribution. SM Es contribution to national GDP is still under reasonable. 49.8 million un it SM Es or 99,99% of total business unit, contribute only Rp2,121 trillion or 1

53.6% of total Indonesia GDP (Biro Pusat Statistik, 2008) . If we make it into Lorentz Curve, the gap will be shown significantly (GI NI coefficient was 39.4 2

on 2005) (CIA, 2009) . Recently, development relies on three factors, i.e. h uman resour ces, technology, and natur al resour ces. Consecutively, involve factor m agnitude. Many st udies 1 2

Biro Pusat Statistik.Perkembangan Indikator MakroUKM Tahun 2008 , (2008), 1 See CIA, The W orld Factbook 2009

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RESEARCH REPORT by Juldin Bahrian syah have been done about relationsh ip of technology and dev elopment. Refers to Kamil Idr is (I dris), one is Paul Rom er who states that accumulation of kno wledge was the driv ing force behind econom ic gro wth (p. 5). Edwar d Denison also con cludes that bet ween 1929 and 1957, 40 percent of the increase in per cap ita incom e in the Un ited St ates of America was due to the “advan ce of kno wledge” (p. 4). Further, W . Lesser of Carro ll Univer sity (Lesser) has resulted a report com mission ed by W IPO that “the relationship between the IP score and both FDI an d im ports is both positive and signif icant” (p. 9). It is alleged in Japan that those theories are valid an d work. Mean while, in Indonesia experiences different condition. Rising of In donesia’ s status according to USTR report of 2008—from Priority Watch List becam e Watch List—is an indicator that Indonesia has been enhan ce IP protection in Indonesia. For eign Direct Investment (FDI) data wh ich released by BKPM (Indonesia Investment Coordinating Boar d)) shows that since 1991 to 2008 there is 34% approxim ately increasin g rate. Japan’ s awakenin g after War World II, use SMEs as core of development; and 3

this decision was correct as well japan’s current achievement . Also, Japan 4

recent GDP of USD 4 trillion or 10% of world’ s GDP proves it. This success appropriately to Endo gen an d Schum peter I Theory thus will be benchmark of this research. Relationsh ip bet ween developm ent an d intellectual property right system is signif icant. One empirical ev idence is given by Jeong- Yeong Lee dissertation (1994) that Foreign Direct Investment tends to be m ore likely to go to countries where intellectual property rights protection is relatively strong (p.183). The conclusion was made from survey s about tendency 14 US chemical corporations to invest to 14 countries, i. e. Argentina, Brazil, Chile, Venezuela, Mexico, Nigeria, Hongkon g, India, Indonesia, Filipin a, Singapore, South Korea, Taiwan, an d Thailand.

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Hisamitsu Arai, Intellectual Prop erty Policies for th e Twenty-First Century: The Japan ese Experien ce in W ealth Creation, (1999), 18 4 Se JPO Annual Report 2008

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RESEARCH REPORT by Juldin Bahrian syah This scho lar research will take a topic of em po wer ing SMEs through IP R protection to national econom ic. It is deem ed to be im portant to trace Indonesia’s m inusities ref ered to Japan’ s. Based on this qualitative analysis, researcher will produce a m ore comprehensive an d f actual roadmap ho w to optimize SMEs through IPR protection system as well as contribute to national econom ic.

1.2.Objecti ves of Research This research propose a study ho w to empo wer SMEs through IPR protection system refers to Japan’ s experien ce. Num ero us technical and nontechnical problems have been faced by Jap an Government will be explor ed an d made as references. Further, this research will also seek a m odel (theorem ) of inentive system to empower SMEs.

1.3.Statement of Problems The resear ch will try to find o ut answer of questions: a. Why is lo w utilization of IPR protection system by SMEs which reflected by lo w SMEs’ IP app lication num ber; b. Why is lo w contribution of IP R protection sy stem to economical growth (Theory perspective) ; c. Ho w to build IPR awar eness amongst SMEs; d. Why is current incentives do not work proper ly,

1.4.Li mitati ons and Deli mitati ons The resear ch design is qualitative framework so that contribute narativedescriptive report as an outp ut. Data will be collected by observ ations, interviews, docum ents, and audiov isual materials. Data then as base of interpretation to answer said pro blem s and questions. The data will use quantitative param eter based on very lim ited lo cus. So, the conclusion will be considered as quantitative-qualitatative m ethod. This research will ignore

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RESEARCH REPORT by Juldin Bahrian syah utilizin g p atent by SMEs due to keepin g fo cus of research. That asp ect needs specific research by other.

1.5.Hypothesis and s ub hypothesis Previous scholars have prov ed the correlation bet ween IP protection an d investm ent. Jeon g-Yeon g Lee dissertation (1994) inform s that that Foreign Direct Investm ent tends to be m ore likely to go to countries wher e intellectual property rights protection is r elatively strong. SMEs are not sm aller big com pany. It has special behav ior due to their properties. SM Es need incentives due to their uniqueness. The challen ge and weakness result low expan dability, mean while their potent and strength prom ise huge contribution to national econom y. Accor ding to this, resear cher m akes this hypothesis: H01: “There is no correlation bet ween incentives of IP R system an d SMEs IP awaren ess” A subsidiary as one form of incentive is a tool to overcome financial gap bet ween big com panies an d SMEs. It reflects governm ent intervention to support weaker business unit within competitive m arket. Curr ent fee struct ure does not accomm odate to encourage SMEs to utilize IPR protection for their business. Although lack of inform ation can be determ ined as reason, but enthusiasm must be subjected. To attract more such enthusiasm , subsidiary will be usef ul breakthro ugh. Nola Hewitt-Dun das in one presentation titled “Evaluatin g Gr ant Support an d SM E Program s in Ir elan d” concluded that “..assistance can negatively impact on performance..” and describe ho w

Assistance impact

an assistance impact SMEs.

π = β ′x +

δ ' z + ε ; …Formula 1

where: π is an

indicator of

business

performance; x is a v ector of firm, m arket and o wn er-m anager ch aracteristics;

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RESEARCH REPORT by Juldin Bahrian syah z is 1 if firm receivin g assistance and 0 if no assistance. Meanwhile, we can treat subsidiary in IP application as well for taxation. Ref ers to Laffer’ s Curv e, it say s that increasing tax level will contribute to national reven ue, but at such degree will lead rever sal ph enomena. Ministry of Economy, Trade an d In dustry of Japan enacted Sm all Business Innovation Research ( SBI R) on 1999 in order to: a. make efforts to increase opportunities for directing & budgets of the national governm ent and governm ental agen cies to sm all business owner s, an d b. provide support for act ual utilization of fr uits of R & D carr ied o ut usin g Subsidies. One good example SME is Tosh in Kogyo Co., Ltd. which received expen dit ure for agential tasks on sm all and medium enterprise en gineer ing dev elopment (1999 to 2000). It produces Im age Proofer that currently able to export to overseas co untries such Chin a, Taiwan, So uth Korea, North Korea, Thailan d, Vietnam, Sin gapor e, Malaysia, Philipp ines, Indon esia, Cambodia, Myanmar, India, Pakistan, and Ban gladesh dish an d Ir an, Turkey, Australia, British Ireland, Germ any, the United States, Canada, Mexican El Salvador, Colombia, Brazil, Africa nations, Russia, and Romania and 100 other companies. The incentive from (SBIR) boo sts Toshin to be emer gin g company. Japan Government also created Prefecture SME Support Centers in every prefecture. The or gan ization aim s to provide patent analy sis, p atent strategy formulation, an d p atent evaluation. 270 com panies hav e supported dur ing fiscal year 2004-2007. Japan Patent Office h as stipulated an accelerate examination sy stem, especially for SMEs. This process will take only 2.2 m onths to be granted rather than 27 months in normal system . Users’ op inion claims that such system help their business, like to offer prototype to customer after obtaining a p atent. Ref ers to above description, researcher break do wns the hypothesis into:

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RESEARCH REPORT by Juldin Bahrian syah H02: “There is no correlation bet ween fee struct ure and incentive sy stem“ H03: “There is no correlation bet ween supportin g unit an d incentive sy stem“ H04: “There is no corr elation bet ween accelerated exam ination process an d incentive system“

1.6.Abbrevi ati ons Fee str ucture means that everythin g that needed to pay to government as revenue of IP service. Supporting unit means that a special unit—internally of IP Office—which serves as peer business to SMEs, to provide all thing necessary in IP application. Acceler ated exam ination process means a privilege to exam ine SMEs IP application faster than comm on.. SM Es IPR awareness means IP utilization by SMEs for their business

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Never ask what your country has given to y ou

BUT what y ou have contributed to your country ⎡WINSTON CHURCHILL⎦


CHAPTER 2: LITERATURE S TUDIES AND METHODOLOGY

W

hy is empowerin g SMEs so im portant? The m ost basic explanation is their contribution of Gro ss Dom estic Product ( GDP) - Gross National

Product ( GNP). Regar din g m acro econom ic, SMEs also contribute to m arket. In gen eral, Kr ugman an d Obstfeld (2009) argue that increasin g of size of m arket will increase the num ber of firm s within a m arket; and scale of each individual firm m eanwhile will decrease the price. They describe by form ulas: S ; bF where: n=

F ; Sb n: num ber of firms P = c+

X=

SbF (p. 678-679)

…Formula 2

P: price X: firm ’s o utp ut S: size of m arket F: fixed co st c: m arginal cost More SMEs exist; better market will be available for public.

2.1.Competi ti on Theories These theories have been developed from gam e theory. Brief ly it states that there are some parties to com pete about something. The go al may be differ ent according to each motive. One m ay wish to beat competitor, or even diminish a com petitor. One literatur e is Porter’s Five Forces of Com petitive Position (see www. businessballs.com) as Figure 1. SMEs also have to face competition am ongst m arket. As new market entrant, SMEs either suggested to watch som e factors such as barrier, geographical factors, incumbents resistance, new entrant strategy, also routes to market. For product and technolo gy development m atter, SM Es have to pay attention to price/quality, m arket distribution chan ges, an d legislative effects. This research em phasizes legislative eff ect and existence of

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RESEARCH REPORT by Juldin Bahrian syah barr ier s, such as patent, regar din g IP R protection sy stem due to lack awareness will build many problems. Figu re ① Porter’s Five Forces of Competi tive Positi on New Entrants, e.g.: • entry ease/barriers • geographical factors • incumbents resistance • new entrant strategy • routes to market

Supplier Power, e.g.: • brand reputation • geographical coverage • product/service level quality

Competitive Rivalry, e.g.: • number and size of firms • industry size and trends • fixed v variable cost ba ses product/service ranges • differentiation & strategy

Buyer Power, e.g.: • buyer choice, size/number • change cost/frequency • product/service importance • purchasing volumes

Product an d Techn ology Development, e.g.: • alternatives price/quality • market distribution changes • legislative effects

SM Es have to compete with big f irms. Mean while, m arket—especially open market as result of globalization—r ules that who is stronger will be winner. “Stronger” term here is including size, quality, and of co ur se m arketable factors. SM Es identically with its weaknesses regardin g f und an d ability thus produce lo w competitiveness. The role of governm ent, especially patent office, is to support SMEs to advance their capacity to survive. Yet, it will again st free market rule an d lead im perfect competit ion. Therefore, it should be treated carefully.

2.2.Incenti ve Theories SM ES can be treated as individual r ather than aggregate. This will help us to sim plify the treatment. In addition, SMEs in general are similar with ordinary business unit besides some unique situation s. This approach, called it as discrete, also st udy interaction SMEs with other entities like foreign SMEs an d government.

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RESEARCH REPORT by Juldin Bahrian syah Comm on management alway s acknowledges abo ut rewar d system. It states abo ut givin g appropr iate r ewar d as well as punishment to boo st perform ance. The problem is how to balance them so achieve designed o utcome. For example, one start-up com pany will focus on heightening con sum er number so that rewar d for m arketing staff will be very adv antageo us. Mean while, an establishm ent corporation will try to stabilize the organization so that rewar d for operational staff is im portant. Other side is p unishm ent. Some call it stick system —as stick an d carrot pairedterm. While you see som eone m ade m istake or un derach ievement, you need giv e appropriate p unishm ent. The m ain purpose is to warn as bad example an d assure that will not happen in f utur e. It seems so simple. Ho wev er, indeed, it needs wisdom and experience. If the punishment is too heavy or too light, it will be contra pro ductive. As r eward system , there are t wo kin ds, i.e. m onetary and nonm onetary rewar ds. Obvio usly, monetary rewards in clude salary, bonus, equity option, royalty, and other can quantified in m oney. Nonmonetary rewar ds contain m ore hum anity touch. The reward such as r eco gnition, promotion, autonomy, and additional service, im prove hospitality and effect performance. Many scholar s have ex amined hypothesis related to reward sy stem . For entrepreneurial, Sexton and Sm ilor (1986)—as depicted by Sandra HonigHaftel (1990)—summ arized interaction six major constructs to succeed rewar d system as follo w: 1. culture, climate, and corpor ate support; 2. mission, strategy and environment; 3. struct ure and design of the venturin g effort; 4. plannin g, monitorin g an d ev aluatin g effort through the establishment of control system that differ from conventional on es; 5. staffin g an d rewar din g the venture activity; and 6. characteristics of lead entrepreneur s or chan ge agents. (p. 24-26)

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RESEARCH REPORT by Ju ldin Bahriansyah San dra Honig- Haftel (1990) also fo un d that bonus correlates to patenting activity by indiv idual scientists, informal or unp ublicized rewar ds correlate to patenting activity in lar ger high-technolo gy firm s. Hence, it is recom mended that both intrinsic and extrinsic rewar ds affordable to maxim ize productivity. Further reported that in the patent-cult ure firm s, r eco gnition, salary, patent awar d progr am , increased autonom y, lar ge sum awar ds, and accelerated prom otion were perceived as high importance for teams. The importance of incentive system is acknowledged by Japan SMEs-selves. Accordin g to last SMEs White Paper released by Jap an Small Business Research In stitute (2008, p. 127), Japan SMEs h ave difficulties to face prof it decline due to intensify ing local competition. Figu re ②Issues in Management at Overseas Bases

Source: 2008 White Paper on Small and Medium Ent erprises in Japan – Improvement of Productivit y and the C hall enge of C ommunity Revit alization

2.3.Sampli ng This scholar resear ch will use qualitative and quantitative approaches. The data will be explored by m eans interviews, surv eys, questioner s, f ield study, an d also literature r esour ces (related reports, studies). Pop ulation of locus should be

RESEARCH REPORT by Juldin Bahrian syah wide range one. But weighin g lan guage and tim e constraint, researcher will use sam plin g method. Researcher will use ran dom sam plin g method according to SM Es definition of Japan Governm ent. The respondents will consist of t wo SM Es from each man ufact uring, wholesale, r etail, an d service industry. The eight SMEs will be determ ined considering v isibility aspects.

To determ ine sam ple n um ber, use n = where:

N N .d 2 + 1

…Formula 3

n = Minim um sam ple num ber N = Population number d = Error Applyin g said formula, sample n umber shall be: n=

4197719

(4197719 )(0.05 )2 + 1

n ≥ 399 ≈ 400 To overcome that minimum sam ple n umber, resear cher design ed fo ur breakthroughs:

Mixed method (i.e. qualitative an d quantitative method); an d Combination of questionnaire an d in-depth interview wher eas consider in g geo gr aphical-repr esentative SMEs an d business field.

2.4.Data Collecti ng Data is collected by combination of in-depth interview an d questionnaire, observation s, and literatur e reso ur ces. In-depth interview and questionnair e are conducted to predetermine SMEs. This questionnair e consists of fo ur themes, i.e. IP awareness am ongst SMEs, attractiveness of f ee struct ure, usef ulness of supportin g unit, and usef uln ess of accelerated exam ination process. The questions off er gradual p erception statem ents; m ark “X” on n um ber 1 for absolutely disagree, n umber 2 for

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RESEARCH REPORT by Juldin Bahrian syah disagr ee, num ber 3 for moderate, num ber 4 for agr ee, an d num ber 5 for absolutely agree. Business Profile Ho w m uch yo ur asset –fixed and movable assets–(in yen) ? ( ) < 50 million s

( ) < 100 million s

( ) < 300 m illions

Ho w m uch yo ur product value (in yen) every m onth? ( ) < 500.000

( ) < 5 m illions

( ) < 150 m illions

Ho w many work ers within your business, including p ermanent and nonpermanent? ( ) < 50

( ) < 100

( ) < 300

What kind of industry is your business? ( ) Manufacturin g an d others

( ) Wholesale

( ) Retail

( ) Services

Ho w long yo ur business h as r un in year ? ( ) less than 1 year

( ) 1 year - 5 year s

( ) m ore than 5 years

What location is your business? Please m ention war d an d city, if possible. ( ) business district

( ) resident district

( ) other

Theme: IP awareness amongst SMEs, consists of 5 questions I kno w IP is importance for my business ( )1

( )2

( )3

( )4

( )5

( )3

( )4

( )5

I need IP protection for m y busin ess ( )1

( )2

I always p ay attention to new inform ation regar din g IP ( )1

( )2

( )3

( )4

( )5

( )3

( )4

( )5

( )3

( )4

( )5

I look for IP information by my initiative ( )1

( )2

IP inform ation is easy to get ( )1

( )2

Theme: Attractiveness of fee struct ure, con sists of 4 questions I know about available fee incentives for IP application provided by Japan Patent Office ( )1

( )2

( )3

( )4

( )5

13

RESEARCH REPORT by Juldin Bahrian syah I always use such fee incentives for my IP applications ( )1

( )2

( )3

( )4

( )5

The fee incentives ar e easy to claim (sim ple, shortly, an d less con ditions) ( )1

( )2

( )3

( )4

( )5

( )4

( )5

The current fee incentives ar e adequate ( )1

( )2

( )3

Theme: Usef ulness of supportin g unit, consists of 5 questions I kno w abo ut available supportin g unit for SMEs of Japan Patent Office ( )1

( )3

( )2

( )4

( )5

The supportin g unit is easy to access (by phone, internet, or even visit) ( )1 I am

( )2 convinced that

( )3 such

supporting

( )4 unit’s capability

( )5 (expert,

infrastr ucture) ( )1

( )2

( )3

( )4

( )5

I always ask such advice or assistance from supportin g unit regar din g m y IP application ( )1

( )2

( )3

( )4

( )5

( )3

( )4

( )5

The advices are usef ul for m e ( )1

( )2

Theme: Usef ulness of acceler ated exam ination process, con sists of 5 questions I kno w about available accelerated examination sy stem for IP application provided by Japan Patent Office ( )1

( )2

( )3

( )4

( )5

I always use such acceler ated examination system for m y IP applications ( )1

( )2

( )3

( )4

( )5

The accelerated examination is easy to claim (simple, shortly, and less conditions) ( )1

( )2

( )3

( )4

( )5

I can start im mediately to exp loit my IP usin g acceler ated examination system ( )1

( )2

( )3

( )4

( )5

I feel more secured for m y business due to this system

14

RESEARCH REPORT by Ju ldin Bahriansyah ( )1

( )2

( )3

( )4

( )5

Theme: Usefulness of IP in centives for the busin ess, con sists of 4 questions The current IP incentives support my busin ess ( )1

( )2

( )3

( )4

( )5

The accelerated examination process support my business ( )1

( )2

( )3

( )4

( )5

( )4

( )5

( )4

( )5

The supporting units support m y business ( )1

( )2

( )3

IP protection guarantee my business to run saf er ( )1

( )2

( )3

The fram ework is depicted as Figure 3. Research er designs all question s will be inter-correlated. Perception of respon dents-which ar e divided into three group s accor din g to each par ameter, will be supported by interview as explorer tool. Perception and explorer will be com pared with controllin g p aram eter which consists of four questions. Profile an d awareness questions role as magnifier of SMEs condition. Figu re ③Questions blueprint

Excellin g research data, it will con duct interview to explore deeper information. Through these in- depth interviews, some hidden or un der- surface facts will be foun d an d contribute m ore un derstand.


Gro up 1. Business Profile Ho w much is yo ur asset (fixed an d m ovable assets) an d product value every month? (in yen) Ho w m any labors do involve in your company? What kind of industry is your business? ( ) Manufacturin g & Others ( ) W holesale

( ) Retail

( ) Services

Ho w long has yo ur business r un ? Please specify the period. Ho w did yo u start up this com pany? Please describe appropriately, for example defin ing idea, f und, location, sy stems, etc. What location is yo ur busin ess, whether in business district or com mon civilization? Gro up 2-1. Theme: IP awareness am ongst SMEs, consist of 5 questions Ho w do yo u kno w about importance of IP for the first time? Ho w m any IP application s do yo u have? Do yo u sp end sp ecial tim e an d/or f un d, to handle yo ur IP m atter? Do yo u know IP curr ent issues? If yes, how do you get such inform ation? What are impedim ents in yo ur opin ion abo ut IP in general? Gro up 2-2. Theme: Attractiveness of fee str uctur e, con sist of 6 questions Ho w well is the fee r eduction of IP application dissem inated am ongst SM Es? Ho w helpful is the fee reduction of IP application to reduce im pedim ent to apply IP protection? Please descr ibe. Do yo u think that current fee reductions ar e adequate? Do yo u alway s use fee reduction to apply IP protection? What kind of fee reduction have yo u used for yo ur IP application? What kind of fee reductions do you suggest for IP application? Gro up 2-3. Theme: Usef ulness of supporting un it, consist of 7 question s Ho w well is the supportin g unit disseminated amongst SMEs? What are assistances prov ided in yo ur location regar din g IP protection?

16

RESEARCH REPORT by Juldin Bahrian syah What do you think about abilities of the supportin g un it (specialists, office, and m aterial) to provide con sultation abo ut IP? Do yo u alway s consult to supporting un it prior to apply IP protection? What kind advice have yo u gotten from the supporting unit? Ho w helpf ul are the advice from supportin g unit off icial for yo ur IP application an d yo ur business? Please describe. Ho w is accessible of the supporting unit (by phone, internet, or even v isit)? Gro up 2-4. Theme: Usefulness of accelerated exam ination pro cess, consist of 5 questions Ho w well is the accelerated exam ination process dissem inated am ongst SM Es? Do yo u alway s request accelerated exam ination for yo ur IP application? Ho w helpf ul is accelerated ex am ination process for yo ur IP application an d your business? Please describe. Ho w lon g is yo ur IP application’s decision made by JPO through this system ? When do you exp loit the invention? W hether you start using immediately post of application, please specify the m onth. Observation will be addressed to captur e som e aspects: i.

Business cycle;

ii.

Innovation cycle; an d

iii.

Interaction B2B ( business to business) an d B2 G ( business to government, i.e. JP O).

2.5.Implementati on Can didate respon dents were determined ran dom ly but geo graphical aspect will be more considered. The m ain com munications are email and pap er. Sin ce com munication can liberate lan guage literacy o bstacles, all questions will be translated into Jap an lan guage an d char acters. Respon dents only n eed to mark in one choice they think is fittest, to write do wn interview and surv ey answer s. The answer was made in Japan lan guage so it needs to be retranslated into English.

17


As guidance to do interview, below is cited from WHO Manual Annex G6, Conducting Semi-Stru ctu red Interviews (http://www. who. int): Preparation for the interviews •

St udy the checklist thoroughly before setting o ut for the field. This m ean s that you will not have to continually ref er to the checklist durin g interviews.

•

Work in team s of two people. One ask s the question while the other takes notes.

•

If translators are used, brief them thoroughly about the purpo se of the interviews an d giv e them copies of the check list. Explain any tools that will be.

•

Dress r esp ectably for the cult ure, but do not “over-dress”. Wearin g expensive clothes in a poor neighborhood can increase the psycholo gical distance between interviewer and inform ants.

Con duct of the interviews •

Ask the inform ant if h e/she is happy to talk. Explain the r eason for the visit and the ways in which the inform ation will be used.

•

Try to fit in with the household as m uch as po ssible. If they are sitting on the floor, you sho uld do so too. Accept offers of tea, snacks etc.

•

Start the interview slowly. Talk about gener al issues (the weather, the fam ily, politics etc.). Be sympathetic and fr iendly.

•

Gradually lead in to the questions on the checklist. Give the inform ants tim e to express themselves in their o wn wor ds. If issues are unclear, let them finish, then ask for clarification. Do not worry abo ut the order in which the issues on the checklist are addressed. It is more important to let the conversation flow.

•

Be alert to inform ation that was not anticipated.

•

Think abo ut the responses that people give and com pare it with inform ation that you received previously ( either in this interview or from other so urces). If there seem to be contradictions, ask for m ore exp lanation or f in d differ ent way s of askin g the same question s.

•

Avoid lookin g at the checklist frequently, as this disr upts the flo w of the interview.

18

RESEARCH REPORT by Juldin Bahrian syah Be alert to signs that the inform ant is getting bor ed or irritated, or has other things to do. Term inate the interview politely if this happen s. For questionnaire, estimated target was 50 respondents (100%), distributing on one event related to SM Es located in Tokyo. Mean while, interview will be deliver ed for 12 respondents, distributing on business field and geo graphical sites ( Kanto Region on ly) as Table 2.1. Tabl e 1. Predetermined Respon dents B USINESS FIELD Manufacturing and others

Wholesale

Retail

Tokyo Tochigi Ibaraki Saitama (Saitama) Ya manas hi Niigata Gunma Nagano Chiba (Chiba) Kanaga wa (Yokohama) Shi zuoka

1

1

1

1

TO TAL

3

Services

TO TAL

G EOG RAPHICAL

1

3

1

1

3

1 1

1

1 1

3 3

3

3

3

12

19

The Victor If you think you are beaten, y ou are. If you think you dare not, you don’t If you like to win but think you can’t, It’s almost a cinch you won’t. If you think you’ll lose, y ou’re lost. For out in the world we fin d Success begins with a fellow’s w ill It’s all in the state of min d. If you think you are outclassed, you are. Y ou’ve got to think high to rise. Y ou’ve got to be sure of yourself before Y ou can ever win the prize. Life’s battles don’t always go To the stronger or faster m an. But sooner or later, the man who wins Is the man who thinks he can.

⎡C.W. LONGENECKER⎦


CHAPTER 3: SMES PROFILE

B

asically, all SM Es have similar condition in many countries. They hav e to battle their weaknesses usin g their stren gth an d grab any opport unities

while enco unterin g threats. They have som e con dition as SWOT ( Stren gths, Weaknesses, Opport unities, Threats) diagram below:

STRENG TH S

WEAKNESS ES

1. Majority number of business

1. Lack of Fund

2. Majority Labor

2. Lo w Market penetration

3. Highly flexibility

3. Lo w

innovative

production

process 1. Government’s goo d will

1. Im ported products, esp.

2. Incentives from local and ov erseas 3. IPR issues

from

China 2. IPR issues 3. Non-tradin g issues

O PPO RTUNITI ES

TH REA TS

Strengths an d W eaknesses are internal con dition whereas Opportunities, Threats are external con ditions. Based on SW OT analysis above, researcher concludes SMEs must be given support mechanism . Meanwh ile, every co untry has un ique con dition so that need su i gen eris policy. This scholar research tries to capture SMEs condition allegedly. Sm all and Medium Enterprises ( SMEs) have diff erent defin ition. Belo w are som e defin itions. Also here is dep icted European United’ s definition as a com parison. Table 2. SMEs Defini ti on in Indonesia

CATEGORY

Medium

TOTAL ASSET

ANNUAL TRANSACTION

≤ Rp10 billion ≈ USD$1 m illion

≤ Rp50 billion ≈ USD$5 m illion

21


Small

≤ Rp500 m illion ≈ USD$50,000

≤ Rp2.5 billion ≈ USD$250,000

Micro



So urce: In donesia Law Num ber 20 of 2008 Table 3. SMEs Defini ti on in Eu rop ean Community

Headcount: Annual Work Unit (AW U)

Annual t urnover∗

Annual balan ce sheet total∗

Medium

< 250

≤ €50 million ≈ US D$70 million

≤ €43 million ≈ USD$77. 4 million

Sm all

< 50

≤ €10 million ≈ US D$14 million

≤ €10 million ≈ USD$14 million

Micro

< 10

≤ €2 milli on ≈ US D$2.8 mil lion

≤ €2 million ≈ USD$2.8 mil lion

Enterprise Category

∗€1≈ US D$1.4 Source: The New SME Definition: User Guide and Model Declarati on Table 4. SMEs Defini ti on in Japan

Industries Manufacturing and Others Wholesale Retail Services

Cap ital Size (m illion) ∗ ¥300 or less ≈ US D$3

¥100 or less ≈ US D$1

¥50 or less ≈ USD$0.5

Number of em ployees 300 or less 100 or less 50 or less 100 or less

∗¥1≈ US D$0.01 Source: 2008 W hit e Paper on Small and Medium Enterprises i n Japan – Improvement of Producti vity and the C hall enge of Communit y Revitalization

Comparin g with GDP per cap ita each co untry/region (EU is $33,400, Japan is 5

$34,200, and Indonesia is $3,900) an d referrin g to CI A Report , Table 3.1. to Table 3.3 will be as Table 3.4. Table 3.4 sho ws ho w the quantification of each def inition for medium level will be interestin g. 5

CIA, Th e W orld Factbook 2009

22

RESEARCH REPORT by Juldin Bahrian syah Table 5. Comparison SME s Defini tion wi th GDP p er Capi ta

CO UNTRY Indonesia

European Community Japan

CATEGO RY

RATIO ASS ET AND G DP

Medium

USD$1 million÷$3,900

Enterprises

≈256 unit

Medium

US D$77.4 million ÷$33,400

Enterprises

≈2317 unit

Manufacturin g

US D$3 mill ion÷$34,200

and other s

≈88 unit

Researcher assum es that Japan made a tight def inition of SMEs which are fewer com panies will be covered. Amon g those three countries, Japan im poses tightest definition. This impacts n umber of recip ient of a policy. European Comm unity, who pledges their econom y on SMEs, cov ers huge n umber of com panies.

3.1.Indonesia S MEs This lack of im provem ent of SMEs does not correlate with number of government effort. Since New Order era, under Soeharto regime, government have been makin g special to unit to support SMEs. In ministry level, Ministry 6

of Koperasi an d SMEs has sever al m ilestones : 1993

1998

1999

2000

6

Based on Presidential Decision Num ber 96 of 1993, regardin g Development Cabinet VI an d Presidential Decision Num ber 96 of 1993, Ministry of Kop erasi became Ministry of Koperasi an d Small Enterprises Con ducting. Governm ent started to pay more attention to empower small enterprises. It was assum ed that sm all enterprises can be supported by Koper asi system. Development Cabinet VII form ed by Presidential Decision Num ber 62 of 1998, signed at 14 March 1998, an d Presidential Decision Number 102 of 1998 excelled the name became Ministry of Koperasi and Sm all Enterprises. Presidential Decision Number 134 of 1999—signed at 10 November 1999—regar ding Position, Duties, Function s, Organization Chart an d Op erational Mechanism, Ministry of Koperasi an d Sm all Enterprises ch anged into State Ministry Concerning of Koperasi an d Sm all an d Medium Enterprises. Presidential Decision Num ber 51 of 2000—signed at 7 April 2000—and Presidential Decision Num ber 166 of 2000—signed at 23 November 2000—enacted Koper asi and Sm all and Medium

Su mmarized fro m www .depkop.go.id

23


2001

Enterprises Reso urces Developing Bo dy. Also, the m inistry nam e chan ged into State Ministry Koper asi and Sm all and Medium Enterprises. Presidential Decision Num ber 103 of 2001 dispersed Kop erasi an d Small an d Medium Enterprises Resources Dev elopin g Bo dy.

Accor ding to Statistic Center Bureau ( BP S), durin g 2008, SMEs have som e achiev ements in field of macroeconomic. SMEs achieved GDP Growth aroun d 6.4% last year an d contribute to GDP aro und Rp2,121.3 trillions or 53.6%. Meanwhile, SMEs population Number is 49.8 Millions unit or 99.99%. Total labor is 91.8 Million s worker s or 97.3%. Total Export is Rp142.8 trillions or 20% of total non-oil & gas export. Gross Fixed Capital Form ation n um ber is Rp462.01 trillions or 46.96%. Table 6. MSMEs GDP Contribu ti on per Sectors (Percen t) 2006-2007

SECTOR Tr ade, Hotel, and Restaur ant Agricultural Building Financ ial and Enter prise Serv ic e Tr ansportation & Communic ation Servic es Pr ocessing Industries Mining Elec tric ity , Gas, & Drinking Water

VALUE 96.45 95.75 66.06 63.72 52.96 47.18 23.90 11.41 8.11

Source: SMEs Annual R eport 2008

The m ost interesting is how Indonesia SMEs do their business. According to Tambunan (2007), SMEs that engages export have t wo kin ds of business type: Type 1:

Buyer-market oriented; SMEs will export their pro ducts to

consum er whenever they visit the business (as tour ist). Type 2:

subcontracted enterprise; SMEs pro duce raw material or one

level process (semi-final products) an d then big company will handle the packin g (finalization) and sales. One survey conducted by The HSBC Asia-Pacific Sm all Business Confiden ce and TNS (Transaction Net work Services)—as stated by Yusuf Karim in

24

RESEARCH REPORT by Juldin Bahrian syah INI LAH.COM—conclude that economical turned down on 1998 relieved by 7

SM Es. Even Indonesia SMEs as high est gro wth in Asia Pacific region . Badan Pembangunan Nasional ( Bappenas) or National Development Boar d within its back gro und study, W ahy udi Kumorotomo8 describe in his presentation that the blueprint of em powerin g SMEs shall be con sists of multiperspectives, they are busin ess sector, supporting str uctur e (business, environment, design, m onetary), market,

connectivity, network, an d

interaction, cultural and social str ucture., which gro uped as “Com ponent”. Other gro up are busin ess innovation, which include innovative SM Es, inform al innovator network, spin offs, innovation funding, ventur e funding, an d environmental values which support innovation; Kno wledge, which include scientist, research unit, training unit, standard and patent, regional r egulation institution, developm ent and diff usion unit, technical and profession al association. Therefore, Macroeconom ic and microeconomic policies have to be regulated to result incentive sy stem. (p. 14) Figure ④Bluep rin t of Empowering S MEs

Com ponent

Business Innovation

• business sector, • supporting structure (business, environ ment, design, monet ary), • market, • connectivity, network , and interaction, • cultural and soci al structure

• innovative SMEs , • informal innovator network, • spin offs, • innovation funding, • venture funding, • environmental values which support innovation

Kno wledge • • • • •

scientist, research unit, training unit, standard and patent, regional regulation institution, • develop ment & di ffusion unit, technical and pro fessional association

incenti ve poli cies

microeconomic poli cies

macroeconomi c poli ci es

7

Survey was condu cted du ring Q2 of 2008 and covered more than 3.000 SMEs in 10 (ten ) countries, i.e. Indonesia, Hong Kong SA R, China, Taiwan , Banglad esh, Singapo re, India, Vietnam, South Korea, and Malaysia 8 This writing is Background Study for National Middle Term Develop ment Plan (RPJMN ) o f 2010-2014 regarding Koperasi and MSMEs empowering , Bapp enas, September 2008 .

25


3.2.Incenti ve S ystem for SMEs Provi ded by Directorate General of IPR Directorate General of Intellectual Property Right (DGIPR) has few items to be incentive for SMEs, i.e.:

¾ Filling Industrial Design Application

Discount 50%;

¾ Assignment of Industrial Design

Discount 50%;

¾ Changing Data of Industrial Design

Discount 33.3%;

¾ Withdrawin g of In dustrial Design

Discount 100%; an d

¾ Extension of Registered Trademark

Discount 50%.

It is har d to track IP utilization by SMEs due to lack of technical aspect. DGIP R do not have comprehensiv e informational resources r egardin g this. Besides, DGIP R have con ducted som e IP Dissemination program am ong SME from 2003 until 2007 in coop erated with JI CA for 18 cities, they are Padan g, Palemban g, Bengk ulu, Pangk al Pinang, Lamp ung, Ser an g, Jakarta, Surakarta, Malan g, Palan gk araya, Balikpap an, Gorontalo, Manado, Ken dari, Makassar, Mataram, Kup an g, dan Jayap ura. From questionnaire report was held in 2007 (not published), researcher can capture some conclusions: 1. The SMEs have not acknowledged abo ut IPR issues; it results lo w awareness to utilize IPR. Further, SMEs neglect IPR as intangible assets; 2. Technique an d m ethod to dissem inate IPR shall be appropriate one so that SM Es are inspired m ore motivation to utilize IPR for their business.

3.3.Japan S MEs Japan Small Business Resear ch Institute has released 2008 White Paper on Sm all and Medium Enterprises in Japan – Im provement of Productivity an d the Challen ge of Com munity Revitalization which r eported condition s concernin g SM Es in Japan. Some of them are summ arized here to get clearer descr iption. A lar ge proportion of SMEs lack com petitive advantages. The tendency is especially high am on g SMEs with a lo w labor pro ductivity level as in Figure 3.2. Accor din gly, price is still n ext main strategy for SMEs to compete. Least SM Es utilize empty m arket whereas only 4.9%.

26

RESEARCH REPORT by Ju ldin Bahriansyah Figu re ⑤Comp eti tive advantages in compari son with competi tors

Source: JPO 2008 Annual R eport (p. 35)

Based on a questionnaire survey, Figure 6 shows the o bjectives of capital investm ents m ade by SMEs dur ing the past five years. Accor din g to this Figure, “labor saving an d rationalization” was the second most com mon objective behin d the “m aintenance an d renov ation of existing equipm ent.” Indeed, it was more com mon than “advancem ent into new business fields, chan ge of businesses, strengthenin g of sideline business areas, an d other diff erentiation”. Figu re ⑥Objectives of Capital In vestment


Figure 7 sho ws the managem ent reso urces regar ded as the most important by SMEs. In gen eral, all SMEs in dicate em ployees as the most important m anagem ent resour ce. Em ployees are considered to be the most important m anagem ent resource by a markedly high er percentage of SMEs as uniqueness of Japan ese way to treat their enterprise.

RESEARCH REPORT by Ju ldin Bahriansyah Japan SMEs have r ealized to engage outsourcin g an d subcontracting for their business. This is for enhan cin g their effectiveness. SMEs with a high level of labor productivity tend to engage more subcontractin g an d outsour cin g activities. Figu re ⑦M ost i mportant management resou rces


White Paper also descr ibes SM Es com position as Figure 8 Governm ent divides into three groups, i. e. secondary, tertiary, and non prim ary. Secon dary m eans m ining, con struction, an d m anuf actur in g industries. While tertiary m eans electricity, gas, heat supply an d water, information an d communications, transport, wholesale an d retail trade, f inance an d insur ance, real estate, eatin g and dr inkin g places, accom modations, medical, health care an d welf are, education, learnin g support, compound services, and services. Primary industries refer to agricultur e, forestry and fish eries. Figu re ⑧Sub contracti ng an d ou tsourcing activi ti es

RESEARCH REPORT by Ju ldin Bahriansyah

Source: JPO 2008 Annual R eport (p. 40) Figu re ⑨ Nu mber of enterp rises by industry and si ze


3.4.Incenti ve System for Japan SMEs This scholar resear ch will focus on three incentive system for SMEs; they are fee str uctur e, acceler ated examination, and supporting unit. Unless there ar e many incentive system s provide by Japan Governm ent, researcher has to lim it this research. Figu re ⑩SMEs Supportin g Grand Design by JPO

RESEARCH REPORT by Ju ldin Bahriansyah


At the same tim e, Patent Office has been established in each Regional Bureau of Economy, Trade an d In dustry in order to provide support that meets local needs, such as offerin g inform ation on and promoting utilization of in dustrial property rights in the region. Figure ⑪SMEs Pref ectu re Supp orting Grand Desi gn by JPO


These offices, alon g with the r egional referen ce rooms of the INPIT an d Intellectual Property

Centers of

prefectur e governm ent, constitute a

com prehensive support framework. JP O aim s to establish an effective support

RESEARCH REPORT by Juldin Bahrian syah framework for SMEs in close coor dination with the afor ementioned Region al Headquarters for Intellectual Property Strategy.

3.4.1. Fee Structure a. Reduction of patent-related fees (related to Article 107 of the Patent Act) JPO has been decided to reduce patent fees which seem to bur den small an d medium -sized enterprises, etc. dr astically from the 10th year (average 12% reduction). Table 7. Annui ty fee ITEM

FEE

Every year from 1st to 3rd year th

th

2,300 yen + Number of cl aims x 200 yen

Every year from 4 to 6 year

7,100 yen + Number of cl aims x 500 yen

Every year from 7th to 9th year

21,400 yen + Number of cl aims x 1,700 yen

Every year from 10th year

61,600 yen + Number of cl aims x 4,800 yen

b. Reduction of tradem ark-related fees (related to Articles 40, 41 (2), 65 (7) an d 68 (30)) It has been decided to reduce trademark registration fees, ren ewal registration fees an d in dividual commission s for tradem ark rights based on international registration (average 43% reduction) which ar e often utilized by small an d m edium-sized enterprises (36% in the number of cases) sin ce these fees an d com mission s ar e higher at hom e than overseas. Tabl e 8. Registration fee ITEM

FEE

Application for trademark regist ration

Number of cl asses x 37,600 yen

Application for trademark regist ration (installment


payment ) Application for defensi ve mark regist ration


These reductions shall attract SMEs to continue their busin ess an d production. Tradem ark as a po wer of trade need more m assive support for SMEs. Tabl e 9. Renewal registrati on fee ITEM Application for trademark regist ration

FEE Number of cl asses x 48, 500 yen

31

RESEARCH REPORT by Juldin Bahrian syah Application for trademark regist rati on (installment

Number of cl asses x 28, 300 yen

payment ) Application for defensi ve mark regist ration

Number of cl asses x 41, 800 yen

Registration fees are deem ed an o bstacle for SMEs to utilize IP protection. This incentive system is also most comm on around the world. Patent Cooperation Treaty (PCT) grants some huge reduction for applicant originated from dev elopin g co untries and Least Develop ing Countries ( LDP). The JPO gr ants an exemption from or a 50% reduction of examination request fees for in dividuals, com panies or R&D or iented SMEs that lack f un ds if they com ply with certain requir ements. Further, also in the case of a sh aredapplication (joint application), this m easure is applied accordin g to the share of the applicant subject to the reduction of or ex em ption from the examination request fee (use achievem ents in 2007: 3,584). (p. 77) Figu re ⑫Claiming Reduction Fee Procedu re 1) Fee Reduction Application + Certificates

2) Delivery of confirmation sheets

3) Exa mina tion Req uest Form OR Pate nt Fe e Pay men t Notic e (Write down t he confirmation sh ee t n umber OR i nfor m st aff

Your local Bureau of Economy, Trade and Industry and other organizatio ns

JPO

APPLICA NT

Submit by post

that th e a pplicati on has be en submitt ed)

Submit online or by post

The JPO grants an exemption (from the first year to the third year 8), a grace period of three years, or a 50% reduction of patent annual fees, to indiv iduals, com panied or R& D oriented SM Es that lack f un ds if they com ply with certain requirements. Further, also in the case of a sh ared-application (joint application), this measure is app lied accor din g to the share of the app licant subject to the reduction of or exemption from the exam ination request fee (use achiev ements in 2007: 694). (p. 78)

32


3.4.2. Accelerated Examination System The accelerated exam ination has been introduced since 1986 in the field of patents. Curr ently, these systems are applicable to the following four types of applications: i) workin g inv ention-related applications; ii) internationally-filed applications; iii) academic in stitutes-related applications; and iv) SME-r elated applications. Eligibility to subm it accelerated exam ination system further exp lain s as below. 1. "W orking invention-related applications" Applications filed by an applicant or a licen see who has alr eady comm ercialized the invention or plans to comm ercialize the invention within t wo year s from the filin g date of a r equest for accelerated examination. 2. "Internationally-filed application s" Applications for inventions that were filed with at least one foreign IP Office as well as the JPO or filed as international applications under the PCT. 3. "Academic in stitutes-related applications" Applications filed by a univ ersity, junior college, p ublic research institute, approved TLO, or an authorized TLO. 4. "SME-related applications" Applications f iled by an SME or an indiv idual. Therefore, the accelerated ex amination system is no w applicable to: a)

applications that were filed with both JPO and at least one foreign IP

Office; an d b)

applications that wer e filed with the IP Office as the Receivin g Office

un der the P CT and then entered in the national phase in Japan; c)

applications that were filed with the JPO as domestic application s an d also

filed with the Receivin g Off ice un der the PCT. Applicants who wish to apply for the acceler ated exam ination system were required to specify the app lication n umber of a for eign patent application under the old system . W ith the revision, however, this requirement has been more

33

RESEARCH REPORT by Ju ldin Bahriansyah flexible. Specifically, where an applicant was not able to obtain the application num ber of the foreign application from the foreign IP Office con cerned, h e is allo wed to subm it such a document as a copy of an app lication filed with the foreign IP Office instead of specifying the app lication n umber of a for eign patent application. The procedur e to apply for acceler ated examination is required to be carried o ut in the Japanese lan guage. Any applicant for accelerated examination who has neither an address nor domicile in Japan is required to follo w the procedure through a representative who has either an address or dom icile in Japan (e. g. Japan ese patent attorney). The applicant shall submit “Notes of the Request for Acceler ated Examination Form ”.

Figure ⑬Accelerated Examinati on System Mil eston es

Source: JPO 2008 Annual Report (p. 47)

Any eligible applicant may engage this system with free of char ge. JPO will release application decision only for 2-3 m onths, while norm ally for 27 months.


3.4.3. Supporting Unit The JPO has staff of intellect ual property right specialists who provide com prehensiv e support to SMEs. They serv e as lectur ers at vario us sem inar s held by the JP O, based on requests from related or ganizations, and they visit SM Es to provide in dividual con sultations, with the objective of r aisin g awareness on IP sy stem s and support measures, and dev elopin g h uman reso urces in local ar eas and SMEs. Accor din g to the Annual Report, durin g Fiscal Year 2007, JPO has con ducted assistance as belo w: a. Visits of SMEs to provide in dividual con sultations (303 visits); b. Lectur er at intellectual property seminar s / train ing session s (216 seminar s / sessions); c. Promotions of awareness on IP m easures by holdin g exhibitions (21 exhibitions) ; an d d. free in dividual consultation services by experts (patent attorneys, etc.) on specific matters related to industrial property rights nationwide (17,576 sessions). (p. 75) As com piled by API C officer, durin g Fiscal Year 2008, JPO also has con ducted assistances as Table 3.8. Tabl e 10. JPO Assistance for SMEs for Fiscal Year 2008 1

Consult ation Proj ect on IPR

2

Consult ation Proj ect on el ectroni c appli cations

3

Proj ect relat ed to

a) Free consultations are held for SMEs concerning industrial property rights with IPR couns elors, including w ell-experienced patent attorn eys v ersed in IPR. In Fis cal year 2008, ・ No. o f couns eling fairs:4,273 ・ No. o f attend ants: 14,302 persons ・ No. o f consultations: 19,960 cases to 14,302 individuals b) Free consultations intended for p ersons working for organizations related to ag riculture, forestry, and fish eries . ・ No. o f couns eling fairs: 52 a) Consultations on electronic p atent applications by using shared terminals No. o f consultations by application advisor ・ On electric application: No. o f persons: 38,208 No. o f cases: 73,734 ・ Other consultations No. o f persons: 1,057 No. o f cases: 3 ,049 No. o f shared terminal us ers: ・ About on-line application: 7 ,120 cases ・ About Intermediate procedure: 6,983 cases ・ About payment p rocedure: 3,853 cases ・ Other On -line us ers: 4 ,339 cases a) Dispatch of speci alists such as patent attorneys and invention

35

RESEARCH REPORT by Juldin Bahrian syah “Regional IP Advisory C ounters”

b) c)

counselors to Regional IP Advisory Counters in n ation-wide offi ces o f Camber o f Co mmerce and Industry to p rovide consultations ・ No. of consultations: 2 ,366 No. of attend ants: 5,009 ・ No. of seminars: 324 No. of attend ants: 6,994 Speci alists’ visit to SMEs which were not able to attend consultation affairs ・ No. of visits: 52 Publications of Q &A on IP R systems

In matter of overseas application, JPO perform assistance in some extent. JPO giv es advice assessment properly wh ether an exam ination sho uld be requested and

whether applications sho uld be filed abroad, pr ivate sear chin g

organizations com missioned by the JP O perform prior art searches fr ee of char ge for patent applications of SMEs or in div iduals prior to requests for examination, upon request of the applicant, an d deliver the search results by mail (Num ber of uses in FY2007: 5,084) (p. 77).

36

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CHAPTER 4: METHODOLOGY IMPLEMENTATION AND ANALYSIS

T

here wer e different actualizations than precedin g plan. Interview delivered to seven SMEs in m anuf acturin g field and received 122

questionnaire responds. These were due to some im pediment an d f urther consideration. For exam ple, SMEs of wholesale, retail, an d service business field perceive less important of patent protection. Patent is closer to m anufacturin g process than tradem ark or industrial design, in addition to innovation issue. All the incentive sy stem of Japan government focuses on p atent regime. Questionnaire r espon ds delivered in t wo ph ases. Fir st phase, the respon d rate was very low, i.e. 17 of 50 SMEs (24%) for 4 week s respondin g tim e. The second was much better which has 105 of 200 SMEs (52.5%) of return rate for 2 weeks. The predeterm ined field of business was unable to be con ducted because of a consideration that SMEs in manufact uring field con sider m ore im portant of IPR; so the more inform ation of their attit ude regar din g IP wo uld be explored.

4.1.Respondents Profile OPTIO NS NO

OPTION

OPTION

OPTIO N

OPTION

ANSWER

1

2

3

4

0 0 0 0 0 5

27 54 61 75 0 20

16 15 8 2 4 18

38 12 12 0 77 38

0 0 0 4 0 0

TOTAL

QUESTION

Q1-1 Q1-2 Q1-3 Q1-4 Q1-5 Q1-6

81 81 81 81 81 81

Hereinafter, responds were filtered to get real SMEs’ respon d. The net num ber is as shown above. The m ost important filter is question n umber 1, num ber 2, and num ber 3. These defines a company is SME or not.

38

RESEARCH REPORT by Juldin Bah rian syah This eligibility made 41 responds were elim inated. If the com pany fails to answer possible an swer, whether gave any signat ure beyon d them or blank, researcher assumed it is not an SME. Dominant respon dents are SMEs with asset less than 300 m illion yen (47%), less than 500,000 yen product value (67%), and less than 50 worker s (75%). It describes that most of respon dent which busin ess in manufact uring en gage quite high capital but less pro duct with limited worker s. When research er notices their history aspect, almost respondents hav e run their business for more than 5 years. It means that they have passed start up phase an d entering establishin g phase. The problem is abo ut expan ding market, including com pany’s capacity. Respon dents’ locations of business are well spread amon gst business district, residential area, or other areas such as m anuf actur in g area (25%, 22%, and 47% respectively). There are “zero” answer in this question (6%). Probably these SME are located in a mixed area, wh ere business and residential are located together.

4.2.Intervie w A nal ysis Researcher con ducted sev en interviewin g to SMEs. Initially, r esearch er plan to spread business f ield of interviewee. But, because there wer e som e obstacles to find available SMEs from wholesale, retail, an d service field, it was decided to engage merely SMEs of m anufactur in g and other s field. The com plete interviewee prof iles as follo w:

b asset (fixed an d movable assets) an d product value ( in yen) every month 1 company is less than 50 million ; 3 companies are less than 100 million ; 1 company is less than 300 m illion ; an d 1 company is m ore than 300 m illion.

39


b product value (in yen) every month 1 company is less than 500.000; and 5 companies are less than 150 million.

b number of worker s within their business, in cludin g p erm anent an d non-perm anent 1 company is less than 50; an d 5 companies are less than 300.

b Duration of business h as r un in year 6 companies are m ore than 5 year s.

b location of company 1 company is in r esident district; and 5 companies are in other ar eas (m anuf acturin g area). Japan SMEs are so unique! They run their business an d dev elop closely bon d to culture. It is only in Japan that we can find memorabilia of foundin g phase within in a shrine. They respect very much for the predecessor an d their efforts. Another interesting fact is professionalism . As Japan ese always do, SM Es pref er use a professional as po ssible. In som e roles, own er keep s effort to build and manage best. Meanwhile it is necessary to o utso urce, an SME r elies on a professional. For this case, whenever SMEs app ly IP application, SMEs hire p atent attorney to handle this matter. Japan SMEs use traditional business model and innovation method. The ign ition is market merely. Whenever a customer deman ds a new product or system, SMEs immediately dev elop their capacity. This process is un der stood sin ce they have lack of kno wledge an d finan ce. They r un their business in short and mid-term vision. Developin g their cap acity, sometim e SMEs co llabor ate with resear ch entities, like univer sities. The fact is that SMEs rarely en gage collabor ation to extend their capability. Company much m ore relies on their o wn developing resources. Sm all num ber of SMEs have special

40

RESEARCH REPORT by Juldin Bah rian syah R& D dep artm ent. Whenever they find that custom er’s demand is not affordable, they decide to reject it. These restrict their expan dable opportunity. Tokyo Institute of Technolo gy (TIT) has a p artnership to empower 9

SM Es . It is researchin g collabor ation an d prov idin g assistance for their business. The assistance includes providing business counter s an d fun din g. Surprisin gly, TIT offers to disclose whole necessary their patent in sp irit of equality. For this k ind of collaboration, SMEs have to contribute 300,000 yen (1,200,000 yen for big firm s). Some other univ ersities h ave their own schem e to support SMEs developin g process. For exam ple in Kanagawa Prefect ure, the local government engages local univ ersity (Tokai Univer sity an d Kanagawa In stitute of Technology) and patent attorney to accom pany SMEs r unning their business. The path to start up is gr eat. SMEs start up using low or medium technology, which combine basic skill an d technolo gy to give added value of pro duct. Most of them are a f amily-based company. It is un der stood that Japanese culture of comm unal is v ery strong. They prefer to corporate their family or relatives. There is on e SME which has sin gle person acts as foun din g father, inventor, m arketer, even a president. When tim e goes, he engages som e employee (his son, daughter, an d relatives) but most strategic roles han d on him. Surprisingly, h e stated that he has no intention to expand his com pany. It is because he does not want to face more pro blem s abo ut his com pany. Majority

respon dents started

up

without

any

assistance from

government. This is also a typical of SMEs. They decided to establish a new busin ess with their f amily or p artners, based on their initial capability. Im proving company’s capacity is another pro blem as aforem entioned. Since they are lack of f und, it influences in hir in g 9

E xplore mo re on TIT website: http://www.titech .ac.jp/english/index.ht ml

41

RESEARCH REPORT by Juldin Bah rian syah professional to support their business. Hence, com pany will prefer to engage f amily or r elatives, with con siderin g that they are more affordable in salary. Respon dents locate in vario us places. Small SMEs prefer to stay in residential ar ea. It is related to reduce their office exp enses. In residential area, SMEs will pay less than a business or m anufactur in g area. Even though it affects in infrastruct ure facilities, SM Es more consider about that expense. Further, the owner an d employee usually stay near their office. Medium size companies ar e lo cated in business or manufact uring area instead. They seek better access and facilities that provided by

local

government. From the visiting, research er

ackno wledges the excellent facilities aro und their district. The incentive sy stem which is provided by JPO is not effective yet. Dominant interviewees answered that they never or rarely use that incentive. The sm all firm s are im peded by the fee amount, and m edium ones ar e by patent attorney fee. As aforementioned, the total fee is much high er than the reduction so that the reduction less contributes to them . The hesitation must be f urther analyzed. It is some kin d of weird wh en people recogn ize there are som e incentives but they are reluctant to engage them. Provisional conclusion is related with their habit in doin g business. In the beginnin g, r esearcher mentioned that Japanese pref ers to hire a professional in handling their IP. This cost is very high an d pervert the im pact. As a f inal part, some other non-technical issues h ave compiled from interviewees. There are some pro blem s wer e arisen, they ar e: 1. serviceability of IPDL; 2. quality of patent exam iner; this issue was arisen by t wo com panies; 3. patent attorney fee; an d 4. duration of ex amination procedure. Researcher also capt ured som e advices, i.e.:

42

RESEARCH REPORT by Juldin Bah rian syah 1. SM Es sho uld avoid usin g subcontractors, exten d their o wn technology ; 2. collabor ate with similar core technolo gy SM E; 3. National wide support as Kanagawa Prefect ure Gov ernment current policy does; 4. Special agent to bridge correspon ding system by applicant upon office action. Deep discussion also necessary durin g this stage; an d 5. Some destination co untries (e. g. Taiwan) join P CT so that ease market penetration.

4.3.Questionnai re Interpretati on The followings are interpretation of each question. It will descr ibe som e descriptive statistic as well as to make a provisional con clusion. To read the respon d, it will interpret that “agree” an d “absolutely agree” support each statement. Otherwise, “absolutely disagr ee” an d “disagree” ar e perceiv ed as deny ing of statement. Resear cher discour aged to interpret “m oderate” because of its n eutrality. Thus, “no answer” will be error control. The first part is capturin g r espondent’s awareness to IP. It aims to un der stan d ho w well respon dent ackno wledge an d utilize IP m atter. Table 11 sho ws 76.6% of respon dents understand that IP is important for their business. It is goo d signal wh en SMEs hav e such m indset. Tabl e 11. SMEs resp ond that IP is i mportan ce for th ei r busi ness

Code 0. 1. 2. 3. 4. 5.

Level no answer absolutely disagree disagr ee moderate agr ee absolutely agree Total

Number 0 7 1 11 25 37 81

% 0.0 8.6 1.2 13.6 30.9 45.7 100

43

RESEARCH REPORT by Juldin Bah rian syah Table 12 sho ws that 72.8% of respondents ackno wledge they need IP protection for runnin g busin ess. it is also consistent with previo us respon d. Table 12. SMEs respond that they need IP p rotection for th ei r business

Code 0. 1. 2. 3. 4. 5.


Number 0 6 3 13 24 35 81

% 0.0 7.4 3.7 16.0 29.6 43.2 100

From next two tables, the questions will lead to how respondents effort in gain ing IP information. Whenever respon dents claim their awareness, it should be follo wed by curiosity an d endeavor in IP information. The fact from Table 13, 53.1% stated their agreement m ean while 33.3% is in neutral state. Tabl e 13. SMEs resp ond that th ey al ways pay atten ti on to new information regarding IP

Code 0. 1. 2. 3. 4. 5.


Number 0 1 10 27 22 21 81

% 0.0 1.2 12.3 33.3 27.2 25.9 100

Next table, Table 14, shows 45.7% respon dents initiative to seek IP inform ation. This decreasin g n umber is pertainin g with respon dents’ lack of effort. It can be explained by f urther question s, whether due to its habit or circum stances. Tabl e 14. SMEs resp ond th at th ey look for IP information by thei r initiati ve

Code 0. 1. 2. 3.

Level no answer absolutely disagree disagr ee moderate

Number 0 3 11 30

% 0.0 3.7 13.6 37.0

44

RESEARCH REPORT by Juldin Bah rian syah 4. 5.

agr ee absolutely agree Total

19 18 81

23.5 22.2 100

37% respondents agr eed that IP inform ation is easy to get, m ean while 24.7% were disagr ee within Table 15. This indicates that there is som e problem in obtaining IP information from JPO. This perception can be used to explain prev ious f act why respon dents are low in effort of obtainin g IP information. Table 15. SMEs respond that IP information is easy to get

Code 0. 1. 2. 3. 4. 5.


Number 0 1 19 31 23 7

% 0.0 1.2 23.5 38.3 28.4 8.6

81

100

Accor ding to Table 11 until Table 15, it can be resumed that chain problem is:

1 IP inform ation is not easy to get Ö Respon dents h esitate to look for IP information by their initiative Ö Respon dents less pay attention to new IP inform ation Ö IP is deem ed less important for business This chapter onward, resear cher exp lored respondents’ perception. It is started with fee incentive which is prov ided by JP O. Table 16 sho ws that 53.1% respondents agr eed that they kno w it. Mean while, almost quarter of them said neutral and disagreed for the rest. It indicates less dissem ination in fee incentive by JPO. Tabl e 16. SMEs resp ond that th ey know about availabl e fee incenti ves for IP appli cati on p rovided by Jap an Patent Offi ce

Code 0. 1. 2. 3. 4.

Level no answer absolutely disagree disagr ee moderate agr ee

Number 0 10 9 19 21

% 0.0 12.3 11.1 23.5 25.9

45

RESEARCH REPORT by Juldin Bah rian syah 5.

absolutely agree Total

22 81

27.2 100

Ref erring to Table 17, only 40.7% respondents agreed that utilizin g fee incentives every tim e they file application. And slightly similar respon dents, 35.8% disagreed. This sho ws their hesitation in en gagin g fee reduction, even though they kno w it. Tabl e 17. SMEs resp ond th at th ey al ways use su ch f ee incen tives for thei r IP applicati ons

Code 0. 1. 2. 3. 4. 5.


Number 1 13 16 18 18 15 81

% 1.2 16.0 19.8 22.2 22.2 18.5 100

Through this question, 18.5% of respon dents agreed that fee incentives are easy to claim . This low num ber is em phasized by h ighly n umber (56.8%) of respon dents stated that it is har d to claim. This is a serio us issue for JPO. Table 18. SMEs respond th at the fee incen tives are easy to claim (si mpl e, sh ortl y, and fewer condi tions)

Code 0. 1. 2. 3. 4. 5.


Number 2 12 34 18 9 6 81

% 2.5 14.8 42.0 22.2 11.1 7.4 100

Appropriateness of fee incentive became another gauge to assur e respon dents’ last perception. Table 19 sho ws only 21% agreed meanwhile 42% said no. this indicate that current fee incentives ar e not goo d enough for r espondents. Tabl e 19. SMEs resp ond that the cu rrent fee incentives are adequate

Code 0. 1.

Level no answer absolutely disagree

Number 4 11

% 4.9 13.6

46

RESEARCH REPORT by Juldin Bah rian syah 2. 3. 4. 5.

disagr ee moderate agr ee absolutely agree Total

23 26 9 8 81

28.4 32.1 11.1 9.9 100

Next chapter is about supporting un it. 48.2% respondents acknowledge this team accordin g to Table 20. Any way, this is good num ber wher eas 28.2% respon dents do not kno w its existence. Tabl e 20. SMEs resp ond th at th ey know ab out availabl e supportin g unit for SME s of Jap an Patent Office

Code 0. 1. 2. 3. 4. 5.


Number 0 8 14 20 23 16 81

% 0.0 9.9 17.3 24.7 28.4 19.8 100

Supporting unit’s accessibility was questioned and its r esult is as sho wn in Table 21. 58% r espondents agreed that such supporting unit is easy to access, through telephon e internet, or visitin g. Respon dents seem to be positive per ception in this case. Tabl e 21. SMEs resp ond that th e supporting uni t is easy to access (by phon e, intern et, or even visi t)

Code 0. 1. 2. 3. 4. 5.


Number 0 6 9 19 23 24 81

% 0.0 7.4 11.1 23.5 28.4 29.6 100

Supporting un it ability is supported by positive perception from 33.4% respon dents an d 27.1% respon dents disagreed. Neutral per ception as num ber of 38.3% indicates something to improve with their capability. Tabl e 22. SMEs resp ond that th ey are convin ced that su ch supporting unit’s cap abili ty (exp ert, infrastru ctu re)

Code 0.

no answer

Level

Number 1

% 1.2

47

RESEARCH REPORT by Juldin Bah rian syah 1. 2. 3. 4. 5.

absolutely disagree disagr ee moderate agr ee absolutely agree Total

7 15 31 19 8 81

8.6 18.5 38.3 23.5 9.9 100

Highly n um ber or respon dents (49.3%) said they rarely en gage supporting unit’s assistance for application, an d only 28.4% wer e frequently as Table 23. Table 23. SMEs respond that they al ways ask su ch ad vi ce or assi stan ce from sup porting uni t regarding th ei r IP appli cati on

Code 0. 1. 2. 3. 4. 5.

Level no answer absolutely disagree disagr ee moderate agr ee absolutely agree

Total

Number 0 10 30 18 14 9

% 0.0 12.3 37.0 22.2 17.3 11.1

81

100

Further, referring to Table 24, 38.3% respon dents ackno wledged the assistance are usef ul, and 23.4% said opposition. This table relieved the result from Table 23. Even though f ewer respon dents engage, they believ e assistance’ s quality. Respon dents are sure that assistance from Supporting Unit help in, for ex ample, determinin g type of protection, respon din g due Off ice Action, an d amendin g their application. Tabl e 24. SMEs respond th at th e ad vi ces are useful for th em

Code 0. 1. 2. 3. 4. 5.


Number 2 7 12 29 20 11 81

% 2.5 8.6 14.8 35.8 24.7 13.6 100

This is last part of main perception compilation. Respon dents ackno wledged acceler ated exam ination well. 49.4% said yes while 28.4% said no.

48

RESEARCH REPORT by Juldin Bah rian syah Tabl e 25. SMEs resp ond th at th ey know ab out availabl e accel erated examin ati on system for IP ap plication provid ed b y Japan Paten t Office

Code 0. 1. 2. 3. 4. 5.


Number 0 15 8 18 20 20 81

% 0.0 18.5 9.9 22.2 24.7 24.7 100

Surprisingly, very lo w num ber s of respon dents agree to utilize accelerated examination facility, i.e. 19.7% an d 46.9% disagreed. The neutral num ber is also h igh, 32.1%. This well spread indicates that respon dents do not have a very good per ception upon this facility. Table 26. SMEs respond th at they al ways use su ch accel erated examinati on system for th ei r IP appli cati ons

Code 0. 1. 2. 3. 4. 5.


Number 1 17 21 26 7 9 81

% 1.2 21.0 25.9 32.1 8.6 11.1 100

Easiness of claim ing was tested through this statem ent as Table 27. 25.9% respon dents agreed that it is easy; mean while 39.5% respon dents stated that it is not. High er n um ber of n egative respon d in dicates more respon dents p erceive less utilization of this system. Tabl e 27. SMEs resp ond that th e accel erated examinati on is easy to claim (si mpl e, shortly, and f ewer conditions)

Code 0. 1. 2. 3. 4. 5.


Number 2 13 19 26 12 9 81

% 2.5 16.0 23.5 32.1 14.8 11.1 100

49

RESEARCH REPORT by Juldin Bah rian syah Researcher tried to know respon dent attitude in exploiting their invention. 22.2% respondents agreed that they will exploit their invention as soon as possible. 35.8% respon dents seemed to postpone its exploitation with certain explanation. Tabl e 28. SMEs resp ond th at th ey can start immediately to exploi t th eir IP u sing accelerated examin ati on system

Code 0. 1. 2. 3. 4. 5.


Number 2 13 16 32 9 9 81

% 2.5 16.0 19.8 39.5 11.1 11.1 100

One effect of startin g exp loit invention is feeling secured to r un business. Table 29 shows that low n um ber of respondents (19.7%) agr eed abo ut this, and more double (44.4%) disagreed. Tabl e 29. SMEs resp ond that th ey feel more secu red for my business due to accelerated examinati on system

Code 0. 1. 2. 3. 4. 5.

Level no answer absolutely disagree disagr ee moderate agr ee absolutely agree

Total

Number 2 10 26 27 12 4

% 2.5 12.3 32.1 33.3 14.8 4.9

81

100

As controllin g par am eter, follo win g questions ex amined respon dent’s consistency. If a respon dent had given a positive perception, he has sim ilar perception in this part. Accor ding to Table 30, 27.1% respon dents agree that present IP incentive system is good in supportin g their busin ess wh ile 35.8% said no. then m ore negative perception inform s something to excel regar din g this. Tabl e 30. SMEs resp ond th at th e cu rrent IP in centi ves sup port th ei r busin ess

Code 0. 1. 2.

Level no answer absolutely disagr ee disagr ee

Number 1 11 18

% 1.2 13.6 22.2

50

RESEARCH REPORT by Juldin Bah rian syah 3. 4. 5.

moderate agr ee absolutely agree Total

29 18 4 81

35.8 22.2 4.9 100

Supporting un it got m edium perception from respondent, again. 33.3% respon ds say agree that supporting unit is usef ul for their business. 37.0%, a higher score, for disagreem ent. Table 31. SMEs respond th at the supp orting uni ts support th eir busin ess

Code 0. 1. 2. 3. 4. 5.


Number 1 7 23 23 20 7 81

% 1.2 8.6 28.4 28.4 24.7 8.6 100

Respon dent who agree that usef ulness of acceler ate examination system is 24.7%, and 45.7% support the opposition. Tabl e 32. SMEs resp ond th at th e accel erated examinati on process supports thei r bu siness

Code 0. 1. 2. 3. 4. 5.


Number 0 14 23 24 14 6 81

% 0.0 17.3 28.4 29.6 17.3 7.4 100

41.9% respon dents realize that IP protection is im portant for safety to business. This in dicates respondents convince its usef ulness regar dless all o bstacles afor e mentioned. Tabl e 33. SMEs resp ond that IP protection guarantee th ei r business to run safer

Code 0. 1. 2. 3.

Level no answer absolutely disagree disagr ee moderate

Number 1 6 16 24

% 1.2 7.4 19.8 29.6

51

RESEARCH REPORT by Juldin Bah rian syah 4. 5.

agr ee absolutely agree Total

21 13 81

25.9 16.0 100

Further analy sis is pertaining of effectiven ess. This means that researcher must m easure their satisfaction and com pare with objective of those policies. Com monly, every policy expects goo d awar eness an d high ly utilized by p ublic. In this case, we can say that government expects the score must be more than 3 of Likert’s Scale, or in a formula: Zi = f ( Xi), i=1,2,3 If Zi > 3, then respon dents satisfied with policy of “i”;

…Formula 4

If Zi < 3, then respondents dissatisfied with policy of “i”. W here Z1: respon dent’s satisf action upon fee structure Z2: respon dent’s satisf action upon supportin g unit Z3: respon dent’s satisf action upon accelerated exam ination X1: par ameter of fee structur e X2: par ameter of supporting unit X3: par ameter of accelerated examination

RMS =

∑ (X

− Xj)

2

i

Formula 5

N Table 34. Deviation

QUESTION

MEAN Xi

Xi - X i

Q3-1

3.4

0.5

Q3-2

3.1

0.1

Q3-3

2.5

-0.4

Q3-4

2.7

-0.2

Q4-1

3.3

0.1

Q4-2

3.6

0.4

Q4-3

3.1

-0.1

Q4-4

2.8

-0.4

Q4-5

3.2

0.0

Q5-1

3.3

0.4

Q5-2

2.6

-0.2

Q5-3

2.8

0.0

Q5-4

2.8

0.0

Q5-5

2.7

-0.2

TOTAL

0.0

Xi - X i

0.0

Xi- X i

0.0

52


“SMEs respon ded that the current IP incentives support their business”, “SMEs respon ded that the acceler ated exam ination process support their business”, and “SMEs respon ded that the supportin g units support their business” gav e a con clusion abo ut respondent’s per ception. Comparin g these an d m ain part will lead the validity of data. Besides, it is im portant to m easur e respon d’ s con sistency through com paring par am eter statements with m ean of m ain perceptions. Subtracting these data will inform its con sistency. Table 35. Consisten cy Measurement The current fee

QUESTION

incentives support my business

SMEs responded that the current fee incentives support their business

The supporting units support my business

The accelerated examination process support my business

(2.8 - 2 .9) -0.1

SMEs responded that the supporting units support their business SMEs responded that the accelerated examination process support their

(2.7 – 3.2 ) -0.5 (2.9 – 2.8)

business

0.1

So, from above table an d equations, researcher m akes assum ptions as follow: 1. total deviations ( difference between each perception an d its average) are zero (Table 34). It m eans that the responds are related statistically. 2. consistency m easurem ent (differ ence between each perception an d its controlling par ameter) in Table 35

score -0.1 abo ut fee incentives, it m eans that the respon ds ar e consistent but lower 0.1 point score -0.5 abo ut supportin g unit, it means that the respon ds ar e less con sistent and lower 0.5 point score 0.1 about accelerated ex amination system, it m eans that the respon ds are consistent but higher 0.1 po int.

53

I am sometimes a fox an d sometimes a lion. The whole secret of governm ent lies in knowing when to be the one or the other. ⎡Napoleon Bonaparte⎦


CHAPTER 5: CONCLUSION

5.1.SMEs Busi ness, Innovation and Intellectual Property Process

R

eferring to innovation process, SM Es use traditional mo del which ignited by market needs10. As a linier model, this innov ation process cannot

anticipate technology developm ent. As user, SMEs rely on in quir ies to construct innovation. It is un derstoo d because the lack of knowledge, especially in management of technology. Day-by- day developm ent basis con strains to visualize the future. Figure ⑭SMEs Bu sin ess Flowchart COSTU MER DEMA ND

Internal R&D Within comp any ability

N

N collabor ation

Y

Advance process and/or product

Y

outso urcin g

Manufacturin g

IP protection

Univer sity or SMEs supporting organization m ay con duct business assistance. SM Es need assistance to engage technolo gy an d increase their quality of product. This process will broaden SMEs R&D activity. It is not a com plete 10

The process consists o f Market n eeds Æ D evelop ment Æ Manu facturing Æ Sales (Hand Out of St rategic Man agement o f Technology 2009 by Ku miko Miyazaki, Tokyo Institute of Technology)

55

RESEARCH REPORT by Juldin Bah rian syah R& D, obviously, but modified R&D which giv e clue to SMEs what is up to date technology easily an d enhan ce their business based on it. Depicting Der ek F. Abell (Tanaka, 2009) that Customer, Function, an d Technology ( CFT) m ust be another arsen al of SMEs. If it is excessively narrow, SMEs shall be stagnant an d less innovative. Other wise is excessively broad, SMEs lack of diff erentiation. Appropriate strategy must be guided by expert. Following Figure 15 sho ws ho w to utilize SW OT an aly sis and ar ises som e recommendations. SMEs sh all use their stren gths to seize opportun ities an d encounter threats, meanwhile ov ercome weakn esses to grab opportun ities an d avoid threats. Figure ⑮SWOT Anal ysis

ACTIONS 1.

STRENG THS

O PPO RTUNITIES

TH REA TS

SÆ O

SÆ T

build

tight

cooperation 1.

Standardize products;

amongst SMEs;

2.

Increase company’s capacity;

2.

specialized product;

3.

IPR protection in destination

3.

increas e

IP

role

within

country.

business. WÆ T

WÆO 1.

WEAKNESS ES

Financial assistance;

2.

Technical assistance;

3.

Business assistance.

1.

overseas

repres entative

2.

soft loan fo r market expanding overseas.

For ex am ple, accor ding to previo us “ ST RENGTHS” fact that SMEs are majority number of

to

assist in IPR;

business, m ajority Labor, and highly flex ibility, must

seize some “OPPORTUNITIES” such as Governm ent’s goo d will, incentives from local and overseas, IPR issues, and available big m arket. Engaging Porter’s Five Force Analysis, accordin g to Ch apter 2 until Chapter 4, we can summ arize some actions appropriately to help SMEs. In or der to win com petition, an SME shall do: 1. collabor ate more intensively with universities an d big companies;

56

RESEARCH REPORT by Juldin Bah rian syah 2. utilizin g IP for their business, esp ecially for overseas m arket; 3. collabor ate with other SM Es, especially which r un in differ ent field/product; and 4. diff erentiate products, in term of quality. Those actions ar e required to overcome such com petition with big firm s, includin g n um ber and size of firm s, industry size an d trends, differentiation, and strategy.

5.2.Recommendati ons The biggest problem of incentives is operational cost which must be paid by applicant. The cost consists of application fee, professional fee, an d pr eparation fee. Application fee has been reduced an d supported by JPO by such incentives system . Its failure is because of other fees. For exam ple, f ee of makin g a patent map is ¥700,000, ¥10,000 per hour for consultation with patent attorney. If we com pare with application fee (¥15,000), it will create huge gap. SM Es need more reduction in other fees to relief their burden. Researcher proposes som e m ethod to enh ance IP utilization by SMEs by givin g appropriate incentive in application fee as follo ws: -

Free application fee

-

Free exam ination fee

-

Acceler ated exam ination, become less than one year, so SMEs will be able to get adv antageo us of IP protection soon er

As com pen sation, SMEs have to pay m ore in annual fee. This schem e (I nam e it “Indebted System”) is con siderin g that SMEs need support to start their business, get protection for business, and repay as compen sation to support other SMEs. It also builds social respon sibility amongst SMEs. Figu re ⑯Ind ebt System

57


Apply IP application

IP protection

Incentives

IP exploitation

Repay incentives

Reducing other f ees, it is beyon d of JPO’ s authority. Resear cher sees som e incentives from other in stitutions, such as prefectures gov ernment, univ ersity, and another m inistry (see Annex). But there is no any nationwide assistance to overcome this issue. As so lution, it is strongly advised to set up a more affordable incentive. Another so lution researcher suggests is deployin g non-com pulsory on engagin g patent attorney into designation co untry for SMEs. This is concordance with TRIPs prin ciple, Most Favourable Nation (MFN), whereas give same treatment for any party regardless country of origin. For exam ple, if a co untry allo ws foreign competition in a sector, equal opportunities in that sector sho uld be 11

giv en to service provider s from all other WTO mem bers accor din g to GATS . As a effect, removing patent attorney fee will reduce SMEs bur den an d expan d their m arket. In other words, it increases SMEs penetration ability to foreign country. Practically, it will face great resistance from certain party, esp ecially patent attorney. But, its “non-com pulsory ” offer s opportunity to in crease patent attorney serviceability an d attract m ore applicants of SM Es. Evidence of an SM E is a com mon issue in every country, in form of certificate from Labor Ministry or similar government body. To be more reliable, certificate of SMEs from origin office will be another ben efit. Another o bstacle is correspondence bet ween IP office an d app licant. In this case, IP office m ay charge additional fee to overcom e this issue. This makes sen se for applicant who has time an d place con straints. Additional fee is used for rapid correspon den ce dev ice, such as air mail, etc. 11

Visit http://www.wto.org for fu rther explanation regarding TRIPs and IP

58


Those conclusion need to be im plem ented com prehensively. Main problem of government’s policy is partly designed and affect disintegration. Jap an Patent Office wh ich has special authority m ay conduct as fo llo w: a. modify terms and con ditions to obtain IP protection; b. build more comprehensiv e supporting unit, which provide peer unit to accompany SMEs to get IP protection as well as exp loit their IP asset; c. provide IP inform ation by optimizin g IT which is SMEs friendly.

59


BIBLIOGRAPHY Creswell, John W . (2003). Research Design: Qualitative, Quantitative, and Mixed Method App roaches. USA: Sage Publications, Inc. Europ ean Comm ission. The New SME definition: User gu ide and model decla ration. Retrieved from http://ec.europa. eu at 25 April 2009. Honig- Haftel, Sandra. (1990). The Effect of Reward Systems on The Development of Patents in High-Technology Firm s ( Dissertation). Michigan: UMI Dissertation Serv ices, 1997. Idris, Kam il. Intellectua l Property: A Po wer Tool for Economic Growth. Retriev ed from http://www. wipo.int at 2005. Indonesia Bureau of St atistic Center ( BP S). (2008). Annual Report 2008. Ishihar a, Takako. Industrial Po licy and Competition Po licy. Retrieved from http://www.jftc. go.jp at 21 Apr il 2009. Japan Small Busin ess Research Institute. (2008). 2008 White Paper on Small and Medium Enterprises in Japan – Im provem ent of Productivity and the Retriev ed from Challenge of Com munity Revita lization. http://www.chusho.meti.go.jp at 21 April 2009. Kr ugm an, Paul R., an d Obstfeld, Maur ice. (2009). International Economics: Theo ry and Po licy. Addison-W esley. Lee, Jeon g-Yeon (1994). Knowledg e Spillo vers: In tellectual Property Rights, Direct Investm ent, and Indu stry- University Research Relation ship s (Dissertation). Michigan: UMI Dissertation Services, 1997. Miyazaki, Kumiko. (2009). S tra tegic Mangem ent of Technology (Hand out). Japan : Tokyo Institute of Technolo gy. Nola Hewitt-Dun das. Evaluating Grant Support and SM E Prog ram s in Ireland. Mexico City, 23 Sept 2004. Retrieved from http:// www.cipi. gob.mx at 21 April 2009. Policy Comm ittee on Innovation an d Intellectual Property. (2009). New Intellectual Property Policy for Pro-Innovation-Intellectual Property System as Global Infrastru ctu re-Augu st 2008. Retrieved from http:// www. jpo. go.jp at 21 April 2009 Ran gk ayo Sati, Yasm on. (2008). Indonesian Intellectual Property Directo ry. Jakarta: Shorcut Gagas Imaji. Tanaka, Yo shitoshi. Material for Tanaka Lab Seminar Class of 2009. The Central Intelligence Agency. CIA- The World Fa ctbook 2009. Retrieved from https://www.cia. gov on 21 April 2009. Wahyudi Kumorotomo. Perubahan Paradigma Peran Pemerintah dalam Pem berdayaan Kop era si dan UM KM . National Middle Term Development Plan (RP JMN) of 2010-2014. Bappenas. Retrieved from www.k umoro.staff. ugm .ac.id at 25 Apr il 2009. World Health Or ganization. Manual Annex G6, Conducting Sem i-Stru ctured Interviews. Retriev ed from http://www.who. int at 21 April 2009. World Trade Or gan ization. Overview: the TRIPS Agreement. Accessed in http://www. wto.or g at 6 September 2009 Yusuf Karim . Soal Ketahanan, UKM Jagonya. Retriev ed from http://www.inilah.com at 16 April 2009.

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ANN EX

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