JAPAN Law and Practice Contributed by: Akira Matsushita, Norihito Sato, Hideki Ben and Nobuhiko Suzuki, Mori Hamada
8.2 Licensing v Assignment of IP Rights Generally, an owner of IP rights would choose to license the IP rights to the JV entity if those IP rights are intended to be used in other businesses of the owner. If the IP rights are not intended to be used by the owner, or if the owner wishes to contribute the IP rights into the JV entity instead of making cash contri - butions, the IP rights may be assigned to the JV entity. If the IP rights are licensed, the JV entity and the licensing party need to agree on: • royalties; • exclusivity; • scope of the licence; • term of the licence; • treatment of third-party infringement; and • other matters. If the IP rights are assigned, these matters are usually not relevant. If the IP rights are assigned to the JV entity, the JV entity can continue using the IP rights even after the termination of the JV agreement. If the IP rights are licensed, usually the JV entity must cease using the IP rights upon the termination of the JV agreement unless otherwise agreed by the parties. 8.3 ESG Considerations in JVs There have not been any significant court decisions or legal developments relating to ESG and climate change that directly or significantly impact on JV prac - tice in Japan. However, there is a growing trend of ESG factors becoming important management issues, since such factors may represent business opportuni - ties and risks in light of long-term corporate value. In this regard, under amendments to the Japanese Corporate Governance Code in 2021, listed compa - nies are mandated to take appropriate measures to address ESG concerns. Moreover, the FIEA requires listed companies to disclose certain ESG information, including important strategies to address ESG mat - ters, in annual securities reports.
• whether the JV partners’ IP rights should be assigned or licensed to the JV entity (see 8.2 Licensing v Assignment of IP Rights ); • ownership of IP rights developed by the JV entity; • licensing of IP rights between the JV partners and the JV entity; and • treatment of IP rights upon termination of the JV. The key IP issues in contractual JVs include: • ownership of IP rights jointly developed by the JV partners; • licensing of IP rights between JV partners; and • treatment of IP rights upon termination of the JV. Usually, JV partners would license the IP rights owned by them to the JV entity or other JV partners; and IP rights developed by the JV entity or jointly by the JV partners would be owned by the JV entity or jointly by the JV partners. In the licence agreement, the parties would typically agree on terms relating to: • royalties; • term of the licence; • exclusivity; • sublicensing; • permitted use and products; When parties transfer IP to or from foreign entities, certain requirements under the FEFTA may apply. For example, when certain IP (including patents, utility model rights, design rights, trade marks and other technologies) relating to “designated technology” (technology in connection with aircraft, weapons, manufacture of firearms, nuclear or space develop - ment) is transferred from a “non-resident” to a “resi - dent” party, the resident party must make, through the BOJ, a prior notification or post facto report to Japan’s Minister of Finance and to other competent ministers, unless certain exemptions apply. Also, export control rules under the FEFTA may apply if certain non-public technology is transferred from a Japanese party to a foreign party. • geographical area; and • other pertinent details.
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