Legal Services

January 2002

The government is considering establishing a panel to devise strategies for promoting intellectual property and which would report directly to the prime minister. Panel members would be appointed from a large number of business leaders and other experts to convene the first meeting in fiscal 2002. Currently, different ministries and agencies regulate matters concerning various types of intellectual property. Sometimes a single type of biotechnology or other advanced technical expertise is handled by several ministries and agencies, and businesses have often suffered from the lack of a consistent policy among ministries. The planned panel would include representatives from such ministries as Economy, Education and Science, Health and Labor, Agriculture, and Justice, as well as the Financial Services Agency, to formulate common policies. Possible topics would include measures aimed at preventing foreign affiliates from copying Japanese products, enhancing the protection of corporate secrets and bolstering the judiciary capability. Critics complain that under the current legal system the court tends to award a far smaller amount of damages when patent rights are violated. They also argue that lawsuits take a long time to complete. (January 20, the Nihon Keizai Shimbun)

A Justice Ministry panel hammered out a draft bill that would amend the commercial Code and could radically alter the make-up of corporate boards and facilitate the decision-making process of large companies. The proposed revisions would allow a firm's management to make quicker, bolder decisions regarding management policies, reflecting the powers of CEO's in the U.S. The subcommittee of the Legislative Council approved the proposals. They are usually much larger in number than their U.S. counterparts and composed of company insiders. Under the revised legislation, a company's board would also be allowed to delegate authority over a broad range of key policies to other selected operating officers. In the new law, operating officers could be given the power to order flotations of new shares or bonds. They also would have the methods of distributing each year's net profits in the form of stock dividends or retained earnings to the boards. The board would have the authority to approve or disapprove the recommendations. The Legislative Council plans to give a final green light to the proposed revisions at a meeting in Feb. This would allow the ministry to submit the amendment to the regular Diet session. The revised Commercial Code would allow a company to appoint a person hired from the outside as a chief operating officer who would then confer with the president of the company. A company would also be allowed to form an auditing committee inside its board to audit the company's financial statements, a director appointment committee to choose board members, and a benefit committee to determine the level of allowances granted to board members and operating officers. (January 17, the Japan Times, the Nihon Keizai Shimbun, the Nikkan Kogyo Shimbun)