Japanese computer manufacturers reach basic patent agreement with IBM

Published on Mar. 18, 2020
Last updated on May 10, 2024

Although the wartime asset freeze was lifted in 1949, the Foreign Exchange Law was enacted in the same year with targeting the balance of international payments and the stability of the currency. But this law prevented IBM Japan from remitting patent fees and technical guidance fees to its parent company, IBM and the World Trade Corporation (WTC) on the business machines sold in Japan. Then, IBM Japan in 1956 planned to make a technical cooperation agreement including the know-how with IBM and WTC and thus send royalties based upon the Foreign Investment Law.

In 1957, Japanese government established the Emergency Measures Law for the Promotion of Electronic Industry Development nurturing domestic computer manufacturers. However IBM didn’t permit to license its basic computer patents to Japanese manufacturers. Therefore, Japanese Government didn’t approve IBM Japan’s technical cooperation agreement with IBM and WTC unconditionally. At the same time, the supervisory agency of computer sectors, the Ministry of International Trade and Industry(MITI) served as a buffer between the Japanese manufacturers and IBM. After intense negotiations, the Ministry accepted IBM’s counterproposal in its entirety at the end of October 1960, while getting IBM to agree to license its basic patents to Japanese manufacturers.

By November 1960, NEC, Hitachi, Fuji Tsushinki Seizo(Fujitsu), Oki Electric, Tokyo Shibaura Denki(Toshiba), Mitsubishi Electric, Matsushita Electric Industrial(Panasonic), and Hokushin Electric Works had initialed basic patent agreements with IBM. The Foreign Investment Council, in December, approved the technical cooperation agreement between IBM and IBM Japan. Under the basic patent agreements, IBM granted the use of its current and future patents for a five-year term, with licensing fees of five percent on systems and machines and one percent on components. Ultimately, Yokogawa Electric, Shimadzu, Shiba Denki, Sharp, Yamura Shinko, Tokyo Denki Onkyo, and others concluded agreements with IBM.