U.S. Firms Tell of Japan Piracy in Trade War

Embittered U.S. business leaders told Congress that Japanese companies copy their designs and then, with the help of the Japanese government, push the U.S. firm out of the market.

“We are in a trade war with Japan, . . . that the Japanese are equipped to win through MITI, the Ministry of International Trade and Industry,” Edgar Otto, head of Therma Systems Inc. of Plainfield, N.J., told the Congressional Task Force on Technology Transfer Thursday.

Otto said his company’s insulated “thermal trays” for serving food hot to hospital patients revolutionized an antiquated serving system in Japan. After five years of success, his Japanese distributor, with the excuse that the U.S. trays were declining in quality, abruptly switched to an affiliated Japanese supplier it had quietly commissioned to copy his design, Otto said.

Nancy Chasen of Rockville, Md., said after initial success her high technology firm, Fusions Corp., “collided directly with a massive structural barrier in the form of the Japanese patent system.”

Long waiting periods for patent approval coupled with the practice of quickly making applications public invites behavior that in the United States would be regarded as fraud or piracy, she said.

“Yet the Japanese patent fraud statute has never been enforced and predatory companies feel free to target promising technologies and to file for patents derived from the products of others,” she added.

Chasen said U.S. negotiators in the year-old Structural Impediment talks with Japan should insist on “meaningful intellectual property rights provisions.”

Ken W. Cole, vice president of Allied Signal Inc. of Morristown, N.J., said his aerospace and engineering firm filed an unfair practices complaint last March with the U.S. trade representative.

He said MITI organized and helped fund a 34-corporation group that told Allied to license its property rights for power transformers at a low price “or else to stay out of Japan.” He said Allied was told no one would buy from them if they didn’t cut the license price.