（第288回）知財実務オンライン：「法律事務所での弁理士の働き方と知財DDの概要」

Added: 2026-05-30

[00:00:04]Good evening, everyone. Land Rent Online, Episode 288. Today, we have invited Mr. Aoki from Anderson Morley Law Firm to give us an overview of how a handyman works in a law firm and the concept of rent.

[00:00:19]Next up, navigator Kashima Otani will be presenting. thank you. thank you.

[00:00:25]This is the May program, and today we have the final session, presented by Mr. Aoki, which will be an overview of efficient and convenient working methods in the office, and a brief introduction to the program.

[00:00:41]Yeah. yes. There are five Junes, huh? There are five episodes in total, including the special episode. So, the first round is a presentation by Mr. Kuji from Little Pianist Co., Ltd., about modeling techniques. Excuse me, this is the person who became the plaintiff in what is probably Japan's first criminal case involving a patent in that prefecture. Almost no one has experience with this. He's probably the only person in Japan with this experience, so I'd really appreciate it if you could watch it in real time. So, the special episode is on Monday the 8th. So, we've asked Mr. Yamada from the Digital Innovation Hub to talk about the user community for equipment DX. And so, Thursday at 11:00 AM, the second week of the year, has arrived again.

[00:01:29]Wow, we're broadcasting the lightning talks from the upcoming 2026 Local Materials Expo as a regular session this time. So, the fourth week is about Kim & Stewart, and by Mr. Takeuchi, the Japanese agent and US agent, it's about US IDS.

[00:01:49]And the final week will be the AI ​​Patent Translation Seminar, where Mr. Fukuda will give a presentation on patent translation using AI. I would be very happy if you would watch it this time as well.

[00:02:04]Oh, Kashima-san is still muted.

[00:02:12]yes. It looks like we can come here for now. yes. It's closed. Oh, Kashima-san is still muted. Oh, I'm sorry. I'm all better now. The screen has become a little more stable for some reason.

[00:02:26][Laughs] Not at all. yes. please.

[00:02:32]yes. Okay then. This was the program for June. yes. Now, let me introduce today's guest. This is Mr. Aoki from Anderso Moritomo Law Office.

[00:02:45]Well, to give you an idea of ​​his career, he originally worked at JEOL Ltd., then at Technology Transcabis, then at Sony Mobile Communications Inc., and in 2013 he joined his current firm, Anderson Mobile, and then after working at Law Firm 0 for a while, he worked at iPass from 2011 to 2013, and then returned to Anderson Mobile in January 2014, where he is currently active as a rent strategy producer for Impitta and Ippatsu. We specialize in patent- related cases and are well-versed in supporting local resource strategy patent startups and local asset flow dependencies. yes. This is Anderson Moritomo's law firm. She is currently working at a very well-known law firm, specifically in the recruitment department.

[00:03:54]yes. However, we are in the middle of something, and we are taking a coffee break, so please feel free to write your thoughts on today's show or any questions you would like to ask Aoi-san in the comments section. We will then ask Aoi-san the questions during the break, and we will continue with this style of discussion today.

[00:04:16]Yes, thank you for your cooperation today. please. Yes, thank you very much.

[00:04:21]Okay, I'll share my screen for a moment, so please wait a bit. yes. I did.

[00:04:25]yes.

[00:04:35]yes. Okay then, I'd like to explain the content we've prepared for today.

[00:04:42]As Mr. Kashima and Mr. Hoshitani introduced earlier, today we would like to talk about the working style of lawyers in law firms, and also about rent due diligence. Thank you for your cooperation. So, thank you in advance. We've already taken two coffee breaks, so I'd like to take two more breaks in between. And then there's the part about my background, well, Mr. Kashima has already given me a general introduction, so there's nothing in particular I need to add, but, well, today I'm going to talk a bit about the differences in how people work at law firms and patent firms, and if you take a look at my background, one thing to note is that I don't have any experience working at a patent firm, so I don't really have a good grasp of what it's really like to work at a patent firm, so I hope you'll take that into consideration. Yes, so, as I mentioned earlier, I'd like to present this in two parts.

[00:05:51]First, I'll talk about how to make the most of your time at a law firm. I think this will take about 15 to 20 minutes. Next, for the second part, I'd like to discuss due diligence on property materials. The reason I'm choosing this topic is that I believe there are many aspects of due diligence on property materials that are possible precisely because one works in a law firm.

[00:06:19]So, I'd like to focus on that aspect in the second part of this presentation. yes. Okay, so, first, I'd like to explain how a handyman works in a law firm. Well, in terms of content, I'd like to talk about these five items, 1, 2, 3, 4, and 5, but there are some things I can and cannot talk about that are specific to the office, so I'd like you to listen to this as a general overview.

[00:06:56]yes. Well, first of all, regarding the percentage of lawyers working as freelancers affiliated with legal offices, this information is available on the freelancers' association website, so we've included that information here. So, among the oldest information available, there was some information from March 31, 2023, and looking at that, it seems that within the law firm, there were approximately 292 people who were also lawyers, which is about 2.5%. On the other hand, looking at the latest information as of March 31, 2026, well, the number of lawyers affiliated with local law firms is 360, so it's an increase of about 70, or slightly less than 70. So, to be honest, there's no more information than this, so I don't know the exact reason, but I think there are two main reasons. First, I think one reason is that the proportion of people with convenience assets who belong to law firms is increasing. And another reason is that I think it's possible that lawyers and other professionals are also registering as convenience specialists at the same time, and that this is included in the numbers. Well, so, um, in this way, in any case, um, handymen who work in law firms are, well, a very small minority overall. Well, I'm not sure if that's the case right now.

[00:08:44]yes. Well, it's a law firm, but, well, I think you're all probably quite familiar with this, but, generally speaking, uh, well, law firms can be broadly divided into firms that handle individual cases and firms that handle corporate cases, and, uh, this is a firm that handles corporate cases. Well, I think that in that regard, they can be broadly categorized into these three forms. So, the first one is, uh, a general law firm. Well, I think this probably applies to the law firm I currently belong to, which has a high percentage of under-law transactions. So, generally speaking, in large firms that handle a wide range of legal fields, I think their clients are often large corporations or financial institutions. And then, we often deal with corporate forms in general, but within that, we have many opportunities to be involved in relatively large-scale cases, such as M or, well, local materials, and litigation. Ah, this isn't about whether I have many such opportunities as a power station employee, but rather, as someone who works in an office, I tend to have many such opportunities. And the second cumulative category is what's called a boutique law firm, or, well, I think it's a firm. Well, a well-known example would be what's called an IT boutique. Well, law firms that specialize in rent and rent-related matters, um, law firms that specialize in land and property rights, I think that many of them mainly handle land and property rights lawsuits, but they are what you might call IP butties. And then, recently, I used to work at a law firm called Law Firm Zero, and I think that law firms like Law Firm Zero also fall into that category.

[00:10:45]However, I think that firms that specialize in startup businesses, or rather, those kinds of firms, are what are called boutique law firms.

[00:10:55]Well, there are boutique firms, IP books and such, but in that regard, the type of work depends greatly on the client's attributes, so for example, with IT and IP-related utility assets, there are probably a lot of disputes, but with startup law firms, I think there are more daily tasks and outreach work than disputes. And now, the third one. Well, I do n't think they're particularly large in terms of their operations, but I think there's a law firm that specializes in removing unwanted information. So, when it comes to these kinds of off-the-beaten-path projects, I think we'll see an increase in cross-board deals, or deals related to foreign countries or internationally. Well, in that sense, I suspect that not only will they need to be proficient in English, but also have a fairly high level of knowledge of foreign laws, not just Japanese laws. Regarding the third point, I myself have never been a member, so this is purely speculation.

[00:11:59]yes. So, well, I've listed here the main duties of a law firm, but basically, as I mentioned earlier, out of the three cumulative totals, I myself have belonged to firms numbered 1 and 2, so I've listed these based on that. So, when I was actually making these slides, I was kind of organizing in my head what kind of work they do, and I came to the conclusion that the lawyers who work at patent offices probably do these kinds of tasks as well. For example, here we have things like patent application, dispute resolution, investment appeals, evaluation and analysis, and research-related work. Then there's consulting, client work, and other tasks, so in total, we divide it into six categories, but I think the main difference is how many opportunities there are to take on these kinds of projects. So, in that sense, if you belong to a law firm, you will have many opportunities to encounter and handle dispute resolution, such as adjudication, disputes, lawsuits, and invalidation trials. [snorts] And then, recently, well, today, as one of the contents of the seminar, I'd like to introduce rent due diligence, and I feel that I have relatively more opportunities to be in charge of this kind of due diligence work, compared to patent offices, for example. So, well, even if you were at a patent office, I think you would probably have the opportunity to do this kind of work if you wanted to, but I have the impression that law firms offer more opportunities to decide on certain types of work. Well, actually, my colleagues, and myself as well, are not necessarily involved in a lot of disputes, and ultimately, the type of work each person is involved in varies greatly depending on their role and position, so I hope you understand that just because it's law doesn't mean that they're involved in a lot of lawsuits.

[00:14:43]yes. And then, well, when I'm affiliated with a law firm, I'm often asked if I'm a sole proprietor, and I think that's probably because, in the case of patent offices, well, most of the handymen are employed, so that's a big difference and I think that's why I get asked that question. Well, so I'm just going to focus on this point for a moment, but first, I apologize for asking about patent offices. As I mentioned in my initial self- introduction, I have never worked at a patent office, so I'm very sorry, but I can only speculate about the actual employment structure.

[00:15:22]However, I understand that in patent offices, many of the assistants and staff are generally employed. So, for example, you might be able to receive your employee pension, or at the end of the year, your office might handle your year-end tax adjustments for you. On the other hand, in law firms, and I myself am one of them, in the case of law firms, I'm not really sure why, but traditionally, lawyers and general service providers are basically independent contractors, and are not employed by law firms, but rather have business contracts with them. Well, in the case of IP brokers and such, it seems that there are cases where they are employed, but, well, I think that in large agencies like ours, everyone is probably working as an independent contractor under a service contract. Well, the question is, what exactly is different about that?

[00:16:27]Well, since they are not employed, they have to pay for national health insurance and national pension themselves, and I think that's the biggest difference. Well, as a citizen, I myself have also been employed by a company, so compared to that time, the difference in the amount of national health insurance and so on is directly visible, so as a self-employed person, this is a painful point, but, in a sense, even though I am not employed, I have a certain degree of freedom, so in that sense, I personally think that working under a business consignment contract like this is one good option. Well, however, in March there's tax filing, and I think many of you may have experience with this, but it's a pretty tough and tedious task that comes at the end of March, and I think in the materials industry there are a lot of projects that need to be completed by the end of the fiscal year, so it's a bit of a downturn in terms of timing, but you have to file your tax return at that time, so in March, things get pretty hectic in many ways, but there's the annoying part of having to file your tax return. Well, as you can see, the way you work and belong to a patent office and a law office are a little different, so I think that's why the way of thinking about compensation and such also changes a bit. Well, I think there are some good options available in this area anyway, so if there are any people who want to work at a law firm, I think it would be a good idea to ask around for information from various people who work at law firms.

[00:18:08]yes. Well, um, well, something like that, well, sorry. I may have gotten a little too superficial in my explanation, but, well, as a general practitioner belonging to a law firm, if I think back on what the advantages are, I think there are broadly two main ones. Okay, first of all... Well, in my office, the office I belong to, um, well, there is a ground materials team that uses ground rent, but there are also teams that do MA, teams that do real estate, um, well, teams that do Rohm, and various other teams, but I think that ground materials is a department that uses law, and is one of the departments within the company. For those who only deal with patent applications and such on a daily basis, I think they feel that the base material is very important because they are in the position of electronic receipts.

[00:19:13]However, if you take a broader view and look at the law in general, you might honestly think that perhaps you are overthinking the base material, or maybe you are overthinking it. In that sense, well, also, actually, there are cases where you might have been treating it as a base material issue, but if you look a little deeper, you might find that there are hidden issues that need to be considered not just in terms of base material, but in other areas of the law. Well, in that sense, if you only deal with local matters on a regular basis, you tend to only see local matters, but when you're in a general law firm, you really get the sense that local matters are just one part of a larger legal matter. Well, I'll explain more about this land-based due diligence later, but in reality, land-based due diligence is a due diligence that focuses heavily on land and materials, so it inevitably ends up writing mainly about land and materials. However, that can only be done in a very small part of an investment agreement, so being able to personally experience how the evaluation results of land-based due diligence affect such investment agreements is probably the biggest advantage of belonging to a law firm like this. And then, as I've written on the right side, I think the fact that we can collaborate seamlessly with lawyers is a huge advantage. So, regarding this point, to give a typical example, when we receive a request for a patent pledge, we agree that it will be a joint pledge with a certain university. So, regarding the joint questioning agreement when we become joint questioners, well, we evaluate it from the perspective of a generalist, and we also review it, incorporating the professional knowledge of a lawyer. I think one of the advantages, or rather, a big advantage, is that we can collaborate as a team in those situations. Well, there are places where such collaboration is possible, but, well, when you're in a law firm, well, there are a lot of lawyers, and, well, I think this is the most important point when you think about it calmly, but, well, utility people tend to have their own area of ​​expertise, such as software or medicine, and I think that many of them take the stance of deepening their expertise further and further, but, lawyers, even if they have never worked with local materials before, are often suddenly assigned to such cases and start studying local materials from there, and that seems to happen quite often. Well, however, um, we're working on a project together there, and everyone is studying very hard every day, um, um, um, um, um, um, um, um, understanding the information, um, understanding the technology, um, um, and the law, um, um, understanding the concept of inventiveness, um, um, there are many people who are very motivated to expand their own field of expertise. Well, as I mentioned earlier, a handyman tends to be someone who pursues their specialization to the fullest extent, but if that's all there is to it, well, there are things that are a little lacking, or I want to broaden my horizons a bit more, so I think that being able to get daily inspiration from the lawyers I work with as a handyman is a good point that leads to my own growth.

[00:22:51]yes.

[00:22:53]yes. So, to summarize Part 1, well, there are only a very small number of handymen who belong to lawyers or law firms, but as I mentioned earlier, there are many advantages to belonging to a law firm, so I would like to encourage anyone who is interested to come into this industry. Secondly, regarding the scope of work, there are various tasks from the outset, and well, the tasks that can be done are probably no different from those of a patent office, but the fact that there are many opportunities to be involved in those tasks is a major difference, which is why I've listed it as the second point. And finally, I'd like to explain that the biggest advantages are that it makes it easier to grasp the overall picture of the case and that it facilitates collaboration among lawyers. So, that concludes Part 1. I've given you a quick overview, but now I'd like to take a coffee break. Yes, thank you. thank you. Yeah. I knew that the number of in-house staff was increasing, but it was around 2.6% to 3, or was it 3.5%? That's right. yes.

[00:24:12]Well, it's certainly increasing, but it doesn't feel like a dramatic increase. It's more like a gradual increase. I agree.

[00:24:20]Yeah.

[00:24:21]So, Ms. Aoki, well, she moved from her current workplace to that startup-type law firm, and then came back, right? Yes, yes, yes.

[00:24:31]So, the types of work you can do are overwhelmingly different, right? In terms of the scale and type of work? Ah, yes. Well, right now I'm working at a general law firm, and before that, I was at a law firm that was a startup-type general law firm.

[00:24:51]As for the work I do, I divided it into six categories earlier, and I think it ultimately comes down to one of those. When I was at the startup-type firm, I think I did more initial consultation and consulting work, but at the general law firm, the proportion of work like local representation and dispute resolution has increased, so even though it's a law firm, the types of work they handle are quite different. I see. I see. Well, I suppose so. It's completely different depending on whether it's a large corporation or a small or medium-sized enterprise, or a large corporation or a startup. Well, the work done by someone in charge of live production at a large corporation and someone in charge of materials at a startup are completely different. Yeah.

[00:25:41]yes. yes. yes.

[00:25:42]yes. So that's it. And then, well, I understand that lawyers mainly work on a contract basis, and I knew that, but why is that? Why is that? I don't really understand. To be honest, I guess it's because there's a culture among lawyers where they earn their living through their own skills. I wonder what the answer is.

[00:26:08]I think there are probably two reasons for this: one obvious reason and one hidden reason.

[00:26:14]yes.

[00:26:15]Regarding the stated reasons, I think that lawyer groups often handle individual cases, but if a freelancer takes on an individual case on a contract basis, and a conflict arises from that, there's a possibility that the firm won't be able to take on the case that was handled by that freelancer later on. So, in a sense, I think that's why they've put this out there and are trying to eliminate such individual cases. That's one point, and well, I think there's probably an underlying reason that lawyers are very familiar with labor law, and labor law is basically... Well, the employer side has a significant advantage over the employee side, so I think a lawyer with legal expertise might be concerned about what could happen if this becomes a mobile phone issue. I think it's because they know the law that they can do that.

[00:27:18]No, the underlying reason is probably the correct one. And also, I think a considerable percentage of lawyers [laughs] have a really intense work style, like working until late at night and then starting work again in the morning.

[00:27:31]Yeah. Well, if you sign a regular employment contract, you won't be able to work that way.

[00:27:34][Laughs] Yeah. Yeah. It's simply impossible. Yeah.

[00:27:38]Yeah. That's what I mean. That's possible.

[00:27:41]surely. yes. I think there are quite a lot of people who work in extremely harsh conditions. I imagine it must be incredibly tough for young talents at the four major agencies.

[00:27:52][Laughs] That's right. Back in the day, people often said things like "9 to 5." It starts at 9 o'clock, 9 o'clock, 9 o'clock and ends at 5 a.m. I think that was a long time ago. I see.

[00:28:02]What's the situation now? What's the situation now?

[00:28:08]Yes. That's interesting. surely.

[00:28:10]yes. Yeah.

[00:28:11]yes. thank you. And, well, by the way, the office is, oh, sorry. I'm sorry to ask this question, but I assume that most people at patent offices are employed by other companies, right? I feel like there are already too many of them. It's like using IP as an employment type.

[00:28:27]Ah, yes.

[00:28:29]Ah, we have two questions coming in right now, and, uh, may I read them aloud? Ah, yes.

[00:28:37]yes. Okay, let's start with Mr. O.

[00:28:38]yes. thank you. I think the strongest team would be one where, regarding patents—the weapons that lawyers fighting for their rights need—they can create those weapons in real time through collaboration between the lawyers and the patent specialists. What do you think?

[00:28:52]Oh, yes. yes. I completely agree with you. Well, for example, when you only consider a lawsuit, a lawyer will naturally be strong in terms of novelty and inventiveness, but when you look at the lawsuit as a whole, they are overwhelmingly weak in terms of how to manage it, because lawyers often haven't studied it in the first place. When you consider all the things you've learned, having that handy girl and lawyer Tack together is, well, the strongest, I think, the strongest when it comes to lawsuits and things like that. I think you're right.

[00:29:31]thank you. Well, that makes sense. No matter how skilled the lawyer is, if the weapon is a Namakura, it's useless, and even if the weapon is legendary, if the person using it is just villager A, it's meaningless. I agree. I agree. I think lawyers are the ones who know how to make the most of it, so yes, yes, yes, that's right. And, well, it continues from there for a bit, but for example, the plaintiff B, who is currently the subject of much discussion, has performed many magical and magical splitting operations, and has filed an administrative lawsuit, oh, sorry. So, you're saying that you filed a lawsuit in the previous lawsuit and then filed a lawsuit in the later lawsuit? So, in the first lawsuit, the reconnaissance unit is disregarded and used as a sacrificial pawn. And then, using the divisional patents created based on the collected information, the method described is to win subsequent patent lawsuits [clears throat], but do you ever do something like that? Well, but you know, that's exactly how you make the most of culture, so I guess it's not like that is a big deal. I think that books, or rather, lawyers, and not just lawyers who are also general practitioners, tend to draw quite a lot as a visual tool.

[00:30:51]Well, in a way, it feels like it's following the theory. I see. I see.

[00:30:55]Well, there are various issues regarding using information obtained during a lawsuit, so it's a bit tricky, but it's a possible strategy.

[00:31:06]Yeah. I think that's entirely possible.

[00:31:09]Yes, so there are times when there are problems and times when there aren't. What kind of cases are there problems? In short, is it about the purpose and specifications of the lawsuit or something like that? Do you understand? Sorry. I don't know the details myself, but, um, regarding the use of information from that point or information that could only have been known through the lawsuit, in relation to that cultural property, I'm not sure if it was raised in the lawsuit you just mentioned or in a different lawsuit, but ah, I see, I see. So, you definitely need to be careful when choosing your sources of information. There's a possibility that the other party might raise some objections.

[00:31:49]yes.

[00:31:50]yes. thank you. I have another question. So, do the handymen at law firms interact with lawyers during the New Year's holidays and such? Do they interact at year-end parties or something like that? Well, I think that probably varies quite a bit depending on the firm.

[00:32:13]Yes, well, at the firm I currently belong to, there's a party at the end of the year that's like a Christmas party where all the firm members get together, and there are also regular get-togethers where lawyers and lawyers from each team get together for drinks, so there are plenty of opportunities to interact with each other.

[00:32:35]Yeah. Yeah. Yeah.

[00:32:36]Well, I suppose so. It seems like there are some places that have a lot of drinking parties, and conversely, there might be places that hardly have any, but yeah. yes.

[00:32:43]Well, you see, as mentioned in the previous comment, teamwork among lawyers is important, so I think it's probably a good idea to maintain communication with each other. I agree. Well, also, it's actually quite common for lawyers and attorneys to work together on a case, so it's quite frequent for the people working on a case together to go out for drinks or something like that.

[00:33:11]yes.

[00:33:12]thank you. Well, personally, I found something quite interesting. It's that many people who use these so-called handy books tend to delve deeply into their specialized fields, and I think that's true. But in the case of lawyers, they often start by studying things like, "Okay, let's get started with materials litigation," so are there many who are trying to broaden their scope of practice? Or is there some other reason why they have no choice but to do so?

[00:33:41]Ah, probably.

[00:33:43]This is purely my speculation, but even if you're a general handyman, I think you'd start your career with the understanding that you'd be doing local-related work, even if you basically want to do local-related work.

[00:33:56]Well, especially for us, it's often the case that we take a mid-career path, like becoming an engineer or gaining some work experience before landing a job in this field.

[00:34:08]However, many lawyers, well, have just graduated from university, law school, and are about to become lawyers. At that time, they experience various things, and from those experiences, they want to choose what they like and what they think is good. I've noticed that especially when people are very young, many tend to try out a variety of jobs. I see. I see. Oh, that's interesting.

[00:34:35]Mr. Pa, what do you think? Um, you can answer the question I just asked, or any other related question, if you like. I agree. Well, actually, when we talk about the diversity of careers among handymen, in the sense of express services, I think 80-90% are in prosecution and patent services, but listening to your story today, I was really envious of how you've been involved in a wide range of fields related to land rent, and I think that at your previous startup-focused company, you were probably writing your own detailed names and things like that, but what was the sense of fulfillment in doing all those different things outside of work, and how do you feel about being able to do all sorts of different things? I agree.

[00:35:24]Well, yes, in my current office, I'm really, well, this might sound bad, but I'm allowed to do various things on my own judgment regarding my clients, and in that sense, the quality of my work isn't limited to just eye-related tasks, but I'm allowed to do all sorts of different things, so yeah. How should I put it?

[00:35:49]Well, to put it in a slightly more sophisticated way, various points of discussion that you wouldn't find in a textbook start to come up. So, in situations like that, of course, there are times when I can't make a decision on my own, or when I can't find the answer on my own, and that's when I get a lot of help from lawyers, and we go through the process of searching for the answer, or sometimes we ca n't find the answer, and we go through the process of finding the best option. In those situations, having a legal office makes it easier to see all sorts of cooperation available, so that's the main advantage, and I think it's something I enjoy myself. Oh, thank you. Yeah. Have you finished making your comments, Mr./Ms.? Yeah. I agree. Okay, then, please move on to the next part.

[00:36:47]yes. Okay, so next up is this one. In the second part, I would like to discuss the due diligence (DD) for ground rent. And, well, this is where, as I briefly mentioned earlier, I'm bringing it up because, well, because I work at a law firm, I have many opportunities to encounter this. So, I'd like to talk about these four main points, but, to be honest, these are things I've talked about in various places, in a sense they're my go-to material, so some of you may have heard some of this before, but, I intend to talk about these four points today, and, among them, regarding the theory part, there's already a lot of information out there about the methods and approaches, so, basically, I'm thinking of focusing on the first and second points. Regarding the third corner intersection, I have included information on how to proceed, but I'd like to focus on the key points and explain them in more detail depending on the time available.

[00:38:04]yes. First, let me explain why a due diligence (DD) for land rent is necessary.

[00:38:12]Um, well, this is the base material due diligence, oh, sorry. This isn't limited to just materials; it summarizes the general objectives of due diligence. What this means is that, naturally, the seller, for example, a startup, the startup issuing shares, often referred to as the target company, naturally has a lot of information about their own company.

[00:38:37]However, the buyer, for example, a large corporation wanting to buy the startup, a venture capital firm, etc., is naturally a third party in their relationship with the seller, so they don't have much information about the company. Well, in that context, we have to make decisions about whether to invest or not, or whether to acquire or not, so, well, there are certainly some difficult aspects to it, and that's where due diligence comes in. Well, I think it's necessary to gather information that we ourselves wouldn't otherwise know, and then evaluate it based on that information. So, I think the main purpose of due diligence is to obtain information that the company doesn't want to know through this important due diligence, and then ultimately use that information to make decisions about investment costs or acquisition decisions.

[00:39:48]yes. So, next, um, is due diligence on the ground materials. Well, in that context, what kind of due diligence did you do regarding the land rent?

[00:39:55]Sorry. The term "due diligence " is a bit difficult to pronounce clearly, so I'll just shorten it to DD. Let me say this in DD. I'd like to summarize here what the position of "on-the-spot due diligence" is. Well, among these, I've listed seven main items for due diligence, such as home, tax, business, finance, environment, Rohm, and IT.

[00:40:22]For example, when a VC invests in a startup, it's obviously not possible to evaluate it solely on location due diligence, so due diligence is conducted from various perspectives. So, where exactly is the ground rent DD located within that?

[00:40:36]Well, generally speaking, I think that the ground material DD exists as one item within what is called home DD. In some cases, it may be done within the business due diligence process, or, although it's not written here, it may also be done within what is called technical due diligence.

[00:41:00]However, generally speaking, I think it is done as one item within home due diligence.

[00:41:08]So, well, as a Bain firm, when you're working, you tend to focus solely on on-site due diligence, and you feel that it's extremely important. But, as it's written right here, understanding that on-site due diligence is just one of many due diligence items is, personally, very important. So, well, I think there are a lot of books explaining local materials out there, but, well, ultimately, when deciding on investment costs or acquisition costs, you have to carefully consider to what extent local risks should be taken into account when making that decision. For example, to take an extreme example, if there is some kind of dispute with the employees, that would naturally not be an item that is evaluated in local material due diligence.

[00:42:01]However, even if there is some kind of risk in local material due diligence, the fact that there is a dispute at Rohm is naturally an important item when making an investment decision. So, in situations like that, if you're only doing local due diligence on a regular basis, well, for example, if you say that this might infringe on a third party, it can sound like it's a huge problem, but honestly, when you look at the whole picture, it's not really that big of a deal.

[00:42:27]So, local due diligence is just one item among many different due diligence processes. So, I personally think it's necessary to have a solid understanding of where the risks and evaluation results from DD fit into the overall sense of movement, before proceeding. So, um, I've summarized the positioning of local material due diligence here, but I want you to understand that local material due diligence is not necessarily something that is done in isolation, but rather it is one item within the overall process.

[00:43:06]yes. So, well, that's the positioning of the ground rent due diligence, and I just talked about the overall purpose of due diligence, but I thought I'd also touch on the purpose specifically related to the ground materials. Well, basically, as I explained earlier regarding the overall purpose of due diligence, it ultimately serves to inform the decision-making process for investment and acquisition decisions. So, the results of this due diligence and on-site due diligence are used in the decision-making process, and ultimately a contract is signed, and in terms of how that is reflected in the contract, the results of this due diligence and on-site due diligence are used. Well, however, as a result of conducting due diligence on the local materials, in the decision-making process for determining investment compensation, I myself have been involved in quite a number of due diligence cases, and I think that there are almost no cases where an investment deal falls through based on the risks obtained and discovered as a result of due diligence on the local materials. Well, there are cases where we are not informed of the final decision on whether or not to make the investment, so it's difficult to say anything for sure, but I think that there are almost no calculations where the land materials are the direct cause of this investment being rejected. So, when you think about why it is necessary to go to such lengths with the land materials due diligence, I think the underlying purpose is this.

[00:44:59]Well, of course, um, VC, well, sorry. Here, I'd like to explain the case where VCs invest in startups. In such cases, of course, the investment doesn't end there. VCs provide various forms of support, such as hand-to-hand assistance, to help the business, the startup's business, grow. So, at times like that, well, after the investment, it becomes important to consider how to use the issues and risks that were identified through this due diligence to improve the business and grow it better.

[00:45:34]However, when it comes to local material due diligence, as I mentioned earlier, there are very few cases where this is the cause of problems. In fact, I think one of the important objectives to consider is to use the results of due diligence to help grow and improve the business afterward. So, um, the purpose is, well, superficially, to be used in the decision-making process for investment and acquisition decisions, but, um, essentially, the purpose is to implement improvement measures against challenges and risks after the investment and acquisition, and I hope you understand that.

[00:46:22]yes. Okay, next, I'd like to talk about the overall picture of the ground material DD (Direct Dealership). Well, first of all, I'd like to write about the flow of intellectual property DD. Well, there are various ways to proceed, so it's a bit difficult to say definitively that this is the way to proceed. So, I'd appreciate it if you could understand that this is, in a sense, the standard way to proceed. First of all, um, the preparation phase. This is, well, in order to conduct DD, well, I'm writing here about the preparations that VC is doing. And now, the second implementation phase. This post describes the phase when a request for due diligence on land rent actually comes to our office and we proceed with the due diligence. And thirdly, it's written as the DD5 phase, and as I explained earlier in the section on objectives, this is about creating a half-zone scene in DD5. Now, if we look at it in a little more detail, well, first of all, in terms of preparation, in this circle 1, I think it is necessary to make a selection, such as deciding which office to commission for the local materials this time. So, at this point, regarding things like rent due diligence, as I mentioned earlier, I think I explained that rent due diligence is just one item among many other things like home due diligence. In reality, law firms have the task of reflecting the risks identified as a result of due diligence into the subsidiary contract. Considering this, I think the ideal scenario is to entrust the work to a firm that can conduct due diligence not only on the local area but also on the entire home, or even review the contract itself.

[00:48:23]yes. And then, well, secondly, I've written about obtaining external information, and the reason why this is necessary is that we need to choose what specific items we will be working on as part of the material due diligence, and when we do that, we need to refer to external information like this to decide what items we will be evaluating, so I think this point, as well as point 2, is quite important. I'll go into more detail about this implementation phase later, so I'll just skip over it for now. So, that's the third phase, DD5. Well, as I mentioned earlier, regarding this, it's not like we just do due diligence and that's the end of it.

[00:49:09]After that, we identify areas for improvement based on the evaluation results of the due diligence, and then we work together with the startup to consider how to actually implement those improvements. That's where step 2 comes in. And I think that being able to actually put that into practice is a very important point.

[00:49:30]So, well, I've written it out as a preparation phase, an implementation phase, and a DD5 phase, and this is a rough outline of the timeline. So, presumably, for someone like me who belongs to an office, the part where I'm directly involved as a local materials due diligence agent is this implementation phase. In some cases, I think we might get involved in the DD5 phase, but generally speaking, the time we can dedicate to DD is only a few weeks to a month, so we have to do it under very tight conditions. So, actually, here, we conduct interviews, uh, due diligence, with the inventors and engineers of the target company, to hear about the technical details, or to get them to provide us with various patent information, or to ask questions about the current organizational structure, and so on. We exchange information like that, and it needs to be done over several weeks, uh, from several weeks to a month. Well, so the initial half of the information gathering is already used up, and we only have 12 weeks left to actually evaluate and analyze it. The fact that we only have 12 weeks is because we've made it a challenge for the Demon Lord, so when you actually try to do the DD, you have to do it within a very limited time, which I think is a bit of a challenge. yes.

[00:51:09]And, um, next up is this one. Well, this is where things start to get important, but first I'd like to give you an overview of what is actually considered an evaluation criterion in rent due diligence. So, here we've divided it into 10 items, but mainly there are 9. Okay, firstly, let's talk about the organizational structure.

[00:51:29]Next, an evaluation of my second patent. The third is the risk of infringing third-party patents. The fourth item is the valuation of owned trademarks. The fifth item is the risk of infringement of third-party trademarks, and the sixth is the regulations related to base materials. The seventh item is the status of the implementation of the accommodation regulations. The eighth item is a contract related to ground materials. The ninth case is a lawsuit related to land rent. Well, we do evaluate these kinds of items during the rent due diligence process. Well, as I mentioned earlier, the actual time available for evaluation is only a few weeks to a month. Including information gathering, I think we'll need to start evaluating these things in the next week or two. So, to be honest, I think it's almost impossible to go through all 1 to 9, and I think we need to consider various factors such as importance, and then, taking those factors into account, we need to choose which items to evaluate next. And, [snort] here, we've listed the interaction elements, which are like evaluation criteria, when you select those evaluation items. Well, this is based on my own experience, so I'm just listing some things. Depending on the VC, there may be more detailed rules and other things that are decided, so please understand that this is just one point of reference. So, when deciding on the criteria for that evaluation, whether it's an investment or a marketing automation (MA) naturally changes the evaluation criteria. Then, depending on the nature of the target business, or, for example, the position of the VC when making an investment—whether they are the lead, explaining the business, or simply a follower—the due diligence process can change significantly. Also, although it says "the contents of the investment agreement, etc.," if the contract, for example, is written in a way that the target company is responsible for risks to third-party privileges in the surface guarantee, then in this due diligence, the evaluation of the special zone in Chapter 3 may not need to be done to that extent.

[00:53:52]So, depending on the contents assumed in the investment agreement, the scope of what needs to be done will change. Well, the scope will also change depending on the scale of the investment, the business phase, and the future expectations for the target company—whether you want them to go public or be acquired by another company through an M&A. So, there are several factors to consider, but I think the important thing is to select the most suitable evaluation items based on those factors.

[00:54:29]So, well, I'd like to introduce the cumulative figures for reference, but first, among the evaluation items, there's the first one, Investment M. The question is how this will affect the evaluation criteria.

[00:54:45]Well, if the objective is to invest in startups, then naturally the management structure and other aspects of those startups will continue to be maintained. So, I think it's necessary to take a good look at whether the organizational structure is in order. Well, I think that other factors such as the valuation of owned patents and the risk of infringement of third-party patents should be the main focus of the evaluation.

[00:55:12]Well, on the other hand, if you want to do an M&A with the target company in the future, or if you want to do an M&A, then in a sense, the organizational structure can be secretly changed, so I think it's not very meaningful to worry too much about the organizational structure. And when it comes to doing M&A, you need to consider what the target audience wants. For example, if they want a brand, then you naturally need to focus on their consumer needs. If they want technology, then you need to consider the patent aspect, such as the evaluation of their existing patents, the risk of infringing third-party patents, or whether their employee invention policy is being properly implemented. I think you need to look at those kinds of things. So, when you consider what investors, M&A firms, or even what they want as M&A firms, the evaluation criteria change accordingly. Therefore, I've chosen this as one example. And to give one more example, when considering the factors within the evaluation criteria here, I think it probably relates to the business content of the subject, or something like that. For example, is the subject a university-born startup that conducts business using very strong technology, or is it a company that doesn't have such a strong commitment to technology but is doing its best to provide consumer services through sales, or is it a company that spun off from a large corporation? In short, the evaluation criteria will change depending on the business content. yes. Well, so, um, well, I'll be repeating myself from earlier, but there are many of these evaluation items, but, well, when deciding on the scope, we have various discussions with the client about the evaluation criteria and factors to consider, and I think that is one of the places where we can really show our strength.

[00:57:29]yes. Next, I'd like to mention the special circumstances regarding ground materials and DD. yes. So, regarding land rent, well, when you look at it from the perspective of the entire home or from the company's perspective, well, I think many of you have probably thought it was a big deal, but I think there are actually not many people in the company who are knowledgeable about land materials. So, I kind of feel that it's a bit special, and when it comes to doing ground material DD, that specialness inevitably brings up a lot of difficulties, and also a lot of advantages. So, I'd like to give you three examples.

[00:58:15]First, as for the special circumstances of ground material DD, well, I think you all already know this, but J+, for example, J+.

[00:58:25]Well, patents are made public a year and a half after they are issued, and that information can be viewed on J+ in Japan, for example, or in the US, although recently, registration has become necessary and various procedures have changed, the Patent Center, or whatever it was originally called, is a database provided by the Japan Patent Office, and one thing to note is that the latest information is relatively easy to obtain from it. Well, so I'll write it here, and also, if you pay money, you can see information about the current situation and so on. So, I think that external information, or rather, objective information, is relatively easy to obtain in this environment. On the other hand, if you want to do a deeper, more in-depth DD (Data Debate), then you will need to receive various kinds of information from the subject. So, at that time, when we first conduct due diligence, we throw a list of documents that the target company should provide.

[00:59:33]Generally, at that time, we ask them to provide things like a business plan, regulations related to local materials, a list of their patents, or their current information on how to handle outsourcing. However, well, those of you who often deal with startups, or who work for startups, might understand this feeling, but in large corporations, I think this kind of information is properly organized for practical use.

[01:00:13]However, in due diligence, the target companies are often startups, so the information on the source materials may only be in the email inbox of the person in charge of communication with the patent office, or the source documents may be in a shared folder, but subsequent amendments, rejection notices, and opinions may not be in the shared folder, and you may not know the latest information. I think this happens quite often.

[01:00:47]So, in that sense, the information is often underorganized, and there are cases where you can't get the information you want, or, well, this kind of information is, of course, information that is only used in material due diligence, such as local material-related regulations, FTO surveys, lists of patents held, and their classifications. Well, for home due diligence, things like contracts are also needed for home due diligence, so in many cases they are already prepared in advance.

[01:01:13]However, when you decide to do a site due diligence, you need to prepare a lot of documents that are not required for other due diligence processes, so you need a lot of information that you generally can't get from due diligence materials in other areas. So, um, the fact that you still can't get the information you want is, well, one special case, I suppose. And, well, as for other factors, of course, there is technical information, um, unpublished information, or, um, information about product usage, um, if it's something like that, um, if it's something that a subcontracting company has, um, or if it's something like that, and we do n't know the detailed drawings, so, information that is highly obtainable is naturally necessary in evaluation, and, um, well, even if it's due diligence for investment, there are cases where we just can't get that kind of information. Well, so, when it comes to accurately evaluating local materials during a due diligence, you naturally want as much good information as possible.

[01:02:23]However, I think there are many cases where obtaining this kind of information is difficult or challenging.

[01:02:33]Next, this is the third most special case, and as I briefly mentioned earlier, in the initial stages of material due diligence, we have the opportunity to interview key players, such as engineers, CTOs, inventors of important patents, and so on, to learn about the contents of their patents, what their current core technologies are, and so on. Well, the thing is, when we interview people like this, many of them are not used to or able to follow DD's instructions. So, when we talk about due diligence, well, of course, it's about whether or not a large investment is decided, and well, many of the people attending the interviews are nervous, or if they're not used to it, they're nervous, so in those situations, it can be difficult to get the information you want, and they may not speak freely, and I think that's also the case with intelligence, and similar to the document disclosure I mentioned earlier, it's something that will come out eventually. So, for example, in places where DD (directive work) is frequently conducted, they often have a list of interview questions prepared in advance. Well, actually, the way you ask questions and the content of the interview need to be quite flexible depending on the attributes of the person being interviewed, how accustomed they are to direct interviewing, and so on. If you want to get the information you need, you have to be creative, so I personally think that interviews are something that really tests the abilities of the person in charge of direct interviewing.

[01:04:30]Well, so, in the case of land material DD, well, as mentioned earlier, the three cities in this section, well, as a special circumstance, external information is, well, relatively easy to obtain. However, on the other hand, if you try to get deeper information, it's often difficult to obtain. Furthermore, even when we try to ask questions in an interview, we often only get limited information due to the limited time available. So, when we move on to the evaluation, I think it's important that you carefully consider how much you can accomplish with this limited information. Yes, I think we should take another coffee break here. yes. yes. thank you. It seems like the side that was pressed or the side that wasn't pressed is stuck. Is everything alright?

[01:05:22]Oh, then here you go. Um, I've frozen up again for a bit, is it okay now?

[01:05:29]Mr. Shima, could you do it for me earlier?

[01:05:30]Yes. I have another question in this section.

[01:05:33]Oh, I'm free now. Oh, yes, I'd be happy to read it aloud. yes. I understand that the evaluation of the materials TD will be reflected in the contract, but we've received a question asking if the seller might raise concerns about how the evaluation was conducted before that stage. What are your thoughts on this? Oh, that happens quite often, of course. Well, in the end, there is a DDL and a debriefing session, and in that debriefing session, well, for example, typically, well, rent infringes a third type of patent. When we tell people that something is dangerous, there are often other, more dangerous or risky situations, or situations involving other people. In such cases, this expression makes it sound extremely dangerous, so it can be misleading. We often get requests to revise the expression. Yes, that happens sometimes. I see.

[01:06:35]thank you.

[01:06:37]Yeah. Excuse me. I've been listening to your detailed explanation about rent due diligence, and I'm quite interested in it.

[01:06:42]From a client's perspective, is due diligence work in this day and age somewhat subjective, with the quality varying considerably depending on the individual? Or is there a certain manual or method that can be followed? If someone with a certain level of skill does it, do you think you can get a fairly standard answer no matter who does it?

[01:07:08]Oh, right. Well, um, it's a personal matter, please wait a moment. Well, after this, um, I'd like to go into the remaining part of this discussion for a little while longer and explain in detail how we will evaluate it, but basically, for example, when it comes to infringing on the rights of a third party, there are various methods, established methods, aren't there?

[01:07:36]yes.

[01:07:37]So, well, I think that if you take each individual review, each item, there probably won't be anything too personal. Well, however, um, however, how to arrange this part, how to arrange the items, yeah. And finally, I'm sorry.

[01:08:00]Within this overall framework, at what level should we evaluate the risks related to land rent? Yes.

[01:08:07]Well, you could say that those kinds of things depend a lot on the individual's experience and judgment.

[01:08:13]Yeah. Ah, I see. thank you. Shall we go, Osusan?

[01:08:18]Oh, yes. That was incredibly educational. Oh, I'm sorry. It stopped for a moment. There are various evaluation criteria, and I've never really thought about which criteria to combine or how to change their importance depending on the other party 's position. Especially from the perspective of a lead or follower, depending on the level of investment, if you're a sell-type investor you probably have to look at a lot of things carefully, but if you're a follower, you can probably be a little less meticulous.

[01:08:51]This perspective was very insightful for me. thank you. I agree. Well, realistically speaking, in the case of followers, they often don't actually do DDs, and instead share the DD that the lead has done.

[01:09:07]So, in that sense, for example, if you're a follower, you'll mostly just refer to the DD that the lead has done, but we often say things like, "This part is special to us, so please just look at this part."

[01:09:25]Yes, thank you. Okay, so, I guess the next part is the last one. For the first part, yes, I'd appreciate it if you could do that. Yes, please.

[01:09:36]Yes, thank you. Well, then, we have about 20 minutes left, so, as I mentioned earlier, I'd like to talk about each of the 10 items listed here, but, well, if I were to talk about all of them in a way that gives you a sense of what they're all about, I'd run out of time, so I'd like to introduce some points that you should pay particular attention to.

[01:10:02]So, there might be some slides that are displayed on the screen but then skipped over, so I hope you'll bear with me on that.

[01:10:11]yes. Okay, so first, let's talk about the organizational structure itself, specifically the strategic aspects. Well, the point to evaluate here is whether the roles are divided according to the phase of the target company.

[01:10:22]For example, with a startup, I think it progresses from seed series to series A to series B, and the company grows according to these phases.

[01:10:30]However, it's not very realistic to expect the founder, or CEO, to still be overseeing the finances even when the company has grown to series C.

[01:10:41]So, what the problem is in such situations is written here, but, well, one is the organizational structure, and of course, with such an organizational structure, there are usually problems with gaps, but, well, in cases where there is no person in charge of local materials, well, how should I put it, as an indirect risk, for example, the rules for employee inventions are not properly implemented, or the output of the special office is taken at face value and local forces are not considered at all, and, well, in this way, I think that is often the root of various risks. So, in cases where the client doesn't have a designated person in charge of materials, when you're doing due diligence on other items, you inevitably start to think, "Oh, I really need to check this carefully," and you end up having to ask detailed questions and dig deep into various aspects.

[01:11:37]So, regarding the organizational structure, rather than directly evaluating whether the organizational structure is good or bad, I think that it's often the source of various risks, so I tend to evaluate it in the sense of raising awareness of those risks.

[01:11:55]yes. Oh, by the way, I've quoted the same link several times here, but it's within the Japan Securities Exchange Group, under the Listing Examination Review Criteria Overview, oh, sorry. Oh, I see. There's a website on the Japan Securities Exchange that has a page that introduces the listing criteria for companies. So, if you take a look at that, or that, you'll see that it touches on the ground materials in several places, so I think it will be helpful as a reference for what items you need to include as a DD, so I hope you'll take a look at this link as well.

[01:12:38]yes. And, I'm sorry. I'll be speaking rather quickly, but I'd like to talk about the evaluation of the special attack units we possess. Well, regarding this, we've broadly increased it in stages 1, 2, 3, uh, stage 3, stage 4, and so on. So, the first stage involves receiving a list of patents from the target party, and then, looking at the formal aspects of those patents, such as whether they are still valid and in existence. So, the second stage involves going a step further and checking whether that authority has actually been established, or whether a dedicated self-governance trial has been set up, and basically taking a look at the situation on the ground. That's what this second stage, stage 2, envisions. Well, up to this point, we have n't really delved into the actual content of the patents, and the information is mostly from formal databases or obtained by requesting information from the patent office. These are items that are evaluated based on the information that can be obtained. Then, as we move on to the third stage, we actually start looking at the contents of the patents.

[01:13:42]Specifically, this involves evaluating whether the target business is properly covered by the patents we have filed. Well, the important thing is whether or not you are properly aware of the entry and consumption of your competitors, and that's what we're evaluating in the third stage, or rather, stage 3. So, well, here, I've been saying in various DD seminars that we should go up to stage 3, but lately, I've honestly been feeling that it's a bit too much, and that it might be enough if we can just organize the rights related to the patents we hold, so in this document, I've written that we should at least go up to stage 2. So, while it's certainly good to go through that stage, realistically speaking, when competitors enter the market in some way, the question is whether those patents are being utilized, and there are many startups or VCs that are negative towards the exercise of rights. In such a situation, I myself am currently struggling to decide how far it is necessary to go as far as this Stage 3. Well, this is an area where I still lack experience, so I'd appreciate hearing various opinions.

[01:15:08]yes. And then, when evaluating this in-house training, well, I'd like to talk about a few key points from here on out. In terms of its position within a startup, I've listed about 10 items, so I'd like to focus on those 10 items. So, I think startups often use the novelty exception, but, well, when it comes to important patents, I would rather you didn't use it if possible. If you use the novelty exception, well, in other countries, especially China and Europe, the novelty exception is practically unusable, so you might encounter obstacles in obtaining rights in those places, or if you use the novelty exception, there might be invalid materials scattered around the world, so I think it's quite risky to try to obtain rights based on such a patent. So, even if you actually have a patent, there are considerable doubts about whether it can withstand the barrier to entry, so I've raised this as the first point, so please be careful when evaluating patents that use exceptions to new cleaning procedures. And now for the second one. Well, uh, the second point regarding startups is that even if a startup says it holds a patent for its core technology, if you look closely, you'll find that the patent is actually still in the name of the university it originally belonged to, or in the case of a university-based startup, it's still in the name of the university it belonged to. I think that happens quite often. So, in situations like that, the reason why this won't be dropped is, well, sorry about that. I just showed you another page, but in this reference, there is a guide to new listings published by the Japan Stock Exchange Group, and in it, it says that university-based ventures are encouraged to acquire the underlying assets from the original owners, and even if it is difficult to acquire them, they should provide a reasonable explanation for that, or to put it simply, make sure they have an exclusive license. So, it's basically written here that the listing application will be evaluated from that perspective. So, from that perspective, if the patent for Kowa Technology remains in the name of the university, it could naturally have a negative impact on the subsequent review process, and that's why I've listed this as the second pitfall. So, that's the situation regarding the listing examination, but in the case of M, for example, if the patent remains with the university and is licensed from the university, then of course the license agreement will have a change of control information, which is what the change of control information is for. It specifies whether the license can be transferred when the control of the company changes to someone else.

[01:18:17]However, when an M&A occurs and the control of the company changes, the license may not be able to be transferred, and that could become a risk to the continuity of business in the case of M&A. So, the name on the patent is very important, so please pay attention to that. And then, this is, well, from the perspective of us handymen, the handymen on the outbound side, this might be the most important thing to be careful about, but, um, this is the third pitfall. Well, the investment is designed in such a way that it can properly cover the target business, but at the stage of the review process, the scope of rights can be narrowed down in such a way that it may not be able to cover the target company's business. I think that is something that needs to be carefully considered. Well, also, while we were able to obtain the rights appropriately in terms of the scope of the rights, and we were able to obtain them from the area we initially targeted, the business itself may have changed, and there may have been cases where the content of the business changed, and this patent could no longer fully cover it. Well, so in due diligence, um, regarding whether the target company's business is being properly valued within the latest scope of rights, well, well, sorry about that. I know I'm repeating myself, but the question is whether it's necessary to look at this much detail, and that's where the meeting comes in. But when you do look at it, when you do need to look at it, these are the kinds of things we should pay close attention to.

[01:19:55]yes. Okay, next up, um, the third one. I will now discuss the risk of infringing a specific third-party patent. Well, regarding this infringement risk, the reason why it needs to be evaluated is that, as mentioned in the new listing guidebook, if a company is involved in a lawsuit that has a significant impact on its performance, or if there is a possibility of being sued in the future, it will be negatively evaluated during the listing examination. Naturally, being sued in a patent lawsuit falls under this category, so we have raised the point that it needs to be properly evaluated as a risk to the continuity of business. Well, however, this, um, well, it's what's called an FTO survey, but regarding this, there are various methods and various contents available within this online land rent question forum, so I would like you to take a look at that. I'll have to skip over this part for now due to time constraints.

[01:21:03]Next, let's move on to the part about evaluating the holdings and consumption. Well, regarding this, just like with patents, there are stages 1 through 4. Stage 1 is simply creating a list and checking whether the rights are still in existence. Stage 2 is checking the registration status of rights, or exclusive licenses. Stage 2 is evaluating the actual scope of those rights. However, regarding trademarks, I personally believe that we should carefully examine the scope of rights in this manner. So, the reason is that, unlike patents, trademarks, in the case of German trademarks and designated goods in Germany, fall under what is called an exclusive right, and within this scope, infringement of a third party's trademark rights is excluded, so, well, we want to make sure that the same scope properly covers our business, and that's why we want to carefully examine trademarks up to this point. So, this is the fourth pitfall regarding trademarks, and it's similar to patents in that respect. When rights are established for the designated goods specified at the time of registration, over time, the business content of the startup changes, and it's natural that the content may deviate from what was specified at that time. So, when you do the local material due diligence, I would appreciate it if you could evaluate whether the designated product station and the current business content are properly aligned.

[01:22:57]yes. Regarding the risk of infringement from third-party consumption, this is basically the same as the risk of patent infringement, so I'd like to omit the explanation here as well.

[01:23:11]yes. Next, let's look at the regulations related to ground materials. Well, regarding the regulations related to land rent, mainly, in the land rent due diligence, there are regulations regarding employee inventions and confidential information management, and also, depending on the company, there are regulations regarding consumption management.

[01:23:29]However, I myself have not evaluated the status of any other regulations besides these, so I think that if we can evaluate whether these three regulations are properly established and in operation in the land rent due diligence, then that should be sufficient as a set of regulations.

[01:23:47]So, evaluating the status of these regulations is what we will be focusing on regarding the land rent regulations. These are the standard evaluation criteria. Now, I'll explain the employee invention regulations in a separate section later, so I'll skip over that for now, but the most important part is the section on managing confidential information. So, here's a pitfall I'm writing about in this comment section, but you may have heard of terms like "open- closed" or "open-closed strategy," and I think there are many startups that choose to keep things closed, meaning they don't release anything, and manage the technology as know-how. However, at that time, well, I do n't think that the military strength itself is bad at all, but, well, at that time, there were many people who thought that simply not releasing it meant that they were managing it with know-how, and I think that was the reality, but I hope that people will take a good look at the fact that just not releasing it does not mean that the secret has been kept or that the waves have been protected. So, well, when we consider that, this is, well, I've picked up some information from older sources, but even if you say that you're managing this information without releasing it, in reality, information is leaking out in various households, and I'm giving you some examples here. Well, typically, information leaks occur when employees take it with them after leaving the company, so please make sure to properly manage trade secrets in terms of confidentiality, usefulness, and non-intelligibleness. I think a key requirement is that you thoroughly evaluate whether or not it's being managed properly. Well, within the context of DD, I think the most important item is whether or not the information is managed in a way that properly satisfies the requirements for confidentiality, so I hope you will focus on this point when you look at it.

[01:25:56]yes. And then, uh, the sixth one. The main pitfall here is the opposite: the startup's concern is whether the information they've obtained is unauthorized use of someone else's trade secrets. Well, typically speaking, this could be described as something like an engineer taking information from all departments and using that information to create something. Well, if this were an engineer, it could be considered a violation of the principal expense obligation, or if it were a manager, there might be an obligation to provide farewell treatment when they leave, so there is a risk of such violations, and I hope that these points will be properly evaluated and considered during due diligence.

[01:26:46]yes. Next, let's look at the implementation status of the employee invention regulations. Earlier, I mentioned that we should evaluate whether or not there is a provision for employee inventions within the local area-related regulations.

[01:26:58]However, regarding the employee invention provision, whether or not it is being properly implemented is an even more important item, so carefully examining the implementation status is the seventh evaluation item.

[01:27:13]Well, I've already written about the rules regarding employee inventions and such, so I'll skip over this part for now.

[01:27:21]So, um, here, I've listed a few important points, but, ah, I think it will probably remain on YouTube as an archive, so I'll just open the slides and skip to the next one, is it this one? Well, the rules regarding inventions made for work are not just something you can simply create; the process of creating them is, you see, extremely important. Well, so, to be more specific, in accordance with the Japan Patent Office guidelines, we need to create employee invention regulations based on these three circumstances: consultations regarding employee invention regulations, and hearings on disclosure opinions.

[01:27:59]However, when creating these regulations, I think it will be necessary to have a thorough evaluation of whether these consultations, disclosures, and hearings on opinions have been properly carried out. And also, while there are indeed employee invention regulations in place, there are cases where the profits are not properly returned to the inventors in accordance with those regulations, or in other words, where the regulations are not being properly implemented. Well, if that happens, then the meaning of having employee invention regulations will be somewhat diminished, so I would like you to pay attention to whether or not there is a solid record of payments as an evaluation item. yes.

[01:28:42]Well, next, as for the regulations related to local assets, well, if you are expecting a startup to go public in the future, then please pay attention to these items, so I've listed them here. And lastly, if you are expecting a startup to do an M&A with someone, then please pay attention to these items, so I've listed several of them here.

[01:29:11]However, I think there are probably many other excellent resources that lawyers and others have explained about this, so I hope you will refer to those as well. As for the lawsuits related to the ground materials, there are no further questions about that, it's simply a matter of whether there are any or not, whether we are actually currently involved in any such lawsuits, so I will omit the detailed explanations on that matter. yes. That's how it's designed.

[01:29:36]Excuse me. Regarding the definitive argument about the local DD, I had to rush through it and just flip through the slides to explain it, but it will be included in my slides. I've included this as reference information at the end, but, well, I'm sorry about that. As I briefly mentioned earlier, a crucial aspect of market entry is whether or not patents are properly protected. I did mention that I'm currently struggling with that issue, but of course, besides patents, there are various other things like contracts for all the technology and how-to management, and ultimately, it's important that all of these things are taken into consideration and protected. The important thing is that it's protected, so I'd like to discuss in detail why patents aren't all that important, and I've included a slide at the end to explain this point, but due to time constraints, I'll have to omit it here. yes.

[01:30:30]Yes, I apologize for rushing at the end, but I'll conclude my introductions here.

[01:30:40]Yes, thank you.

[01:30:40]Yes, thank you. No, it was very interesting. I've never really studied DD properly before, so there were actually a lot of things I was hearing for the first time. yes. And then, I felt that the parts about common startup experiences were pretty spot-on. I think there are probably very few places that offer that kind of job-related release.

[01:31:11]Well, unless there's a lawyer or someone like Mr. Yone acting as an advisor, and on the other hand, if the founder or executives have already taken out the contract in their personal names, then it's pretty much a transaction between the parties involved. yes.

[01:31:25]Yeah. Related party transactions seem like they would be a hassle.

[01:31:32]Yeah. I understand, so what would be the best way to prevent this? When you're starting a company, there are a mountain of things to do, but I think you could say something like, "Let's at least get a trademark first," and also, "Let's create a set of employee inventions together," and it would be good if someone could say that, but the problem is, who's going to say it? Yeah, that's true. It's difficult, isn't it? It's difficult, isn't it? It's true that not many people actually get to the point where they need to consult with someone conveniently during the startup phase. That's right. So, that's exactly what I mean by starting a business for the second time or later. Yes, yes, yes. If that's the case, then I suppose you wouldn't immediately consult a lawyer at the initial stages of starting a business, right? Right?

[01:32:19]Yeah.

[01:32:20]Well, I just... well, I'm sorry. These kinds of related investor transactions can be quite troublesome, you know.

[01:32:28]Well, I haven't been able to explain it in much detail, but, how should I put it?, there was a situation where an invention was made without any employee invention regulations in place, and the profits, the reasonable profits, weren't properly paid, or, um, there was a situation where the right to obtain a patent was transferred without any employee invention regulations in place, and I think that kind of thing happened when the company was founded, but, well, we can do something about those things on our own.

[01:32:59]Well, I think the most realistic approach would be for you to respond to these kinds of criticisms in a due diligence process by saying something like, "I'll do my best to improve it on my own." I see. I see.

[01:33:09]thank you. There's one more question we've received. It's about the contract being cancelled due to a misjudgment in the due diligence process. You mentioned that it's rare for a contract to fall through if things don't work out, but is that because the buyer, or M, or M&A, has looked at and approved the company's future potential in other due diligence items?

[01:33:43]Oh, right. Well, I think that's probably the case. And then, well, this is, um, well, if you've worked in a startup and you understand the concept of convenient assets, you'll probably understand it intuitively, but basically, many of the risks that are discovered in the local area can be fixed later on. Well, as I explained earlier, that part of the slide that's currently on display, and also, even if there is an infringement of a third party's rights, there are many risks that can be addressed retrospectively, such as being able to change the design, or the other party shutting it down, or in the worst case, obtaining a license, so in that sense, yes. I think there are probably very few cases in society where deals like this exist regarding land rent. Well, yes. Well, if the business model itself is already completely destroyed, then it's simply impossible to recover. that's right. That's right.

[01:34:43]That's far more important. yes. I see. I see.

[01:34:45]thank you. yes. How was it, Shima-san?

[01:34:51]Yes. Me too. I often provide support for startups, but on the other hand, from the perspective of the M&A side, the risks involved in this era, particularly the concept of D, have been very helpful and informative today. thank you very much. Yeah.

[01:35:08]thank you.

[01:35:10]Okay, now we'd like to move on to the ending, so would you mind turning off screen sharing for a moment?

[01:35:15]Yes.

[01:35:19]yes. Yes, that's the ending. And now, thank you all for watching today. Next week, on Thursday, June 4th, at 6:30 pm, we will be inviting Mr. Kura, the representative director of Little Pianist Co., Ltd., to talk about the day my land materials, whose rights I thought I had protected were not protected, were sold on the Prima app, the reality of land material damage, and the land material literacy necessary for Japan's future. We hope you'll also watch the live stream.

[01:35:51]yes. yes.

[01:35:51]So, that's all for today. Thank you all for watching today. thank you very much.

[01:35:56]Thank you so much for today, A-san. And with that, I'll take my leave for today.