Eyes on The Prize

By Barbara Rudolph

The myth persists. Americans are naturally inventive and creative, while the Japanese are clever copiers. Neither imaginative nor inspired, the Japanese shamelessly borrow technological innovations from the U.S. and other nations and transform them into inexpensive household staples. Or so many Americans believe. Look at color-television sets, transistor radios and videocassette recorders, they say: all original American ideas appropriated by the Japanese.

The harsh truth is that if at one time the Japanese could be dismissed as mere imitators, that time is long gone. Not only have the Japanese built up an impressive record for creativity and innovation, but there is growing evidence that Americans may be losing some of their knack for developing and selling new products. A recent study done for the National Science Foundation that attempts to measure the quality of patented products and processes suggests that Japanese innovations may on average be more significant than those of their American rivals. Moreover, the Japanese are snaring a fast-growing share of all U.S. patents. Last year, for the first time ever, the top three recipients of American patents were Japanese: Canon, Hitachi and Toshiba. General Electric, which had held the No. 1 spot for at least 25 years, until 1986, was in fourth place.

While the Japanese are in the forefront of the foreign charge on the U.S. patent office, they are not alone. Foreigners obtained 47% of American patents in fiscal year 1987, up from 34% in 1977. The Japanese led with 17,288 patents in 1987, a 25% increase over 1986. Last year the Japanese held 19% of all U.S. patents. In 1987 West Germany, led by Siemens, grabbed 8,030 patents, up 15% over 1986, and France received 2,990, up 19%.

Among individual companies, Japan's Canon, a manufacturer of cameras, printers and copiers, has been outstanding. In the past decade the firm has pushed its annual U.S. patent total from 158 to 887. During the same period, the annual number of patents issued to General Electric fell from 822 to 784.

"The numbers are real warnings," says Francis Narin, president of Computer Horizons, a consulting firm that did the patent study for the NSF. "We're in danger of losing our technological edge. We've gone soft." Herbert Wamsley, executive director of the Intellectual Property Owners, a trade group representing inventors, agrees. Says he: "The level of patenting is a sign of ) corporate virility. This is yet one more indication that America's technological leadership is slipping."

Some executives dispute such interpretations of the Government data. GE argues that it would still rank as the patent leader if the Government had included patents granted to R.C.A., which GE acquired in 1986. Arno Penzias, vice president of research at AT&T Bell Laboratories and a Nobel laureate, says patents are not a reliable measure of basic research. Says he: "We have stuff in our labs that may not see the light of day for years. Because we haven't patented it, does that mean it's not worthy science?" Also, companies often decide against registering an important invention with the Patent Office in order to keep it secret. Once a product or process receives a patent, it becomes public knowledge.

Even so, the new NSF study cannot be dismissed lightly. In the first attempt to measure the quality of patents, Computer Horizons examined how often they were cited in applications filed by later inventors. The assumption of the study: when a patent is cited frequently, that means it has had a significant impact on subsequent research. By this standard, the Japanese come out ahead. In a ranking based on how often their patents are cited, Japanese inventors scored 26% higher than their American counterparts.

Important Japanese innovations cover a broad range of industries. A computerized automobile carburetor manufactured and patented by Nissan Motor was cited about 50 times in subsequent applications. Computer Horizons considers 50 follow-up citations an extraordinarily high number. Canon's patent for the optical disc, one form of which is the compact disc sold in record stores, was mentioned 56 times. An antibiotic developed by Takeda Chemical Industries earned more than 100 subsequent citations. Among recent advances, Hitachi has patented various processes for a higher-resolution TV, called IDTV, which produces a much sharper picture than conventional color TV. Some Japanese innovations, like floppy computer disks and Sony's Walkman, have already produced marked changes in the American life-style.

Critics of the NSF study argue that not every oft cited patent will be commercially valuable. Carlos Kruytbosch, head of the NSF Science Indicators Unit, admits that a patent may be cited in later applications because it represents an important historical precedent for future inventions but the original patent may never lead to anything that can be profitably produced. Patents are more important in businesses where technology moves relatively slowly, like the pharmaceutical industry, than in fast-changing fields such as electronics and computer science.

Nonetheless, few would deny that the Japanese have made great strides as inventors. One common explanation is that the Japanese government, largely through the Ministry of International Trade and Industry, spends enormous sums on research and development. But that is only part of the story. Surprisingly, 79% of the funds for Japanese R. and D. come from private companies. In total R.-and-D. expenditures for 1986, the U.S. outspent Japan $119 billion to $72 billion. But that was because more than 50% of American research was funded by the Government (notably the Pentagon) and by universities. Not surprisingly, American research is more frequently geared to military applications or purely scientific purposes, while the Japanese concentrate on work with commercial potential. One result is that the Japanese bring inventions to market more quickly than do their U.S. rivals.

The atmosphere at many Japanese research labs has changed in recent years and now fosters more inventiveness. Gone are the legions of men in dark suits and white shirts at Canon's research center, nestled in the hills of Atsugi, just outside Tokyo. Today researchers sport jeans and T shirts, and no one wears a tie. This may seem superficial, but it symbolizes the greater freedom of inquiry, which is stimulating innovation. Says Yoshioki Hajimoto, vice director of the center: "Surprised visitors often comment that this place seems too free." The ambience has contributed to Canon's remarkable success in developing computer printers. Three years ago Canon began producing a high- speed printer that can reproduce magazine-size color graphics in about three seconds. Canon's competitors have only recently come up with anything comparable.

While Japanese companies have been working to destroy their lingering image as mere imitators, many American firms have steadily grown less innovative. Some U.S. executives pay so much attention to short-term, bottom-line results that they hesitate to make costly investments in new products that will only pay off in the long run. Says Patents and Trademarks Commissioner Donald Quigg: "Stockholders demand more and more immediate results, but research and development does not occur overnight." Rather than develop new product lines, many firms buy them by taking over other companies.

Even when American engineers and researchers come up with new ideas and technologies, their companies often fail to follow up. The genesis of the videocassette recorder is a classic case in point. The basic technology for the VCR was invented at a California-based company called Ampex and developed further at R.C.A. Yet it was two Japanese companies -- Sony and JVC -- that bought rights to the technology and modified it. After 10,000 patented improvements, they made the VCR an affordable household product.

No one, however, is counting the U.S. out in the innovation derby. If anything, the Japanese challenge has created a competition that should jolt the U.S. out of its complacency. The beneficiaries of this continuing battle for technological supremacy will be consumers worldwide.

CHART: TEXT NOT AVAILABLE

CREDIT: TIME Chart by Joe Lertola

CAPTION: INVENTION INVASION

DESCRIPTION: Percentage of U.S. patents issued to foreigners '67, '72, '77, '82, '87; Color: various products.

With reporting by Yukinori Ishikawa/Tokyo and Thomas McCarroll/New York