Innovation management (intellectual property activities)

Idemitsu Kosan is currently transforming its business portfolio based on Medium-term Management Plan. In order to advance this transformation, we believe that intellectual property, an intangible asset, will play an important role, and we are working to further utilize the intellectual property we possess.
Specifically, from the early stages, such as the business planning stage, we analyze the internal and external environment using the IP landscape methodology, and provide intellectual property information to business division personnel and researchers to identify areas in which existing businesses need to be strengthened and consider the direction of new businesses, thereby promoting the transformation of business portfolios.

Our intellectual property governance integrates company-wide policies with on-site needs through collaboration between the Intellectual Property Department and business divisions, addressing company-wide corporate issues and individual issues in each business division, and has established an effective intellectual property system for the growth of our business.In recent years, we have also been working to create a system that can incorporate precautions from an intellectual property perspective in response to economic security concerns regarding our business.

Looking at the status of patent applications and patent ownership by business segment of our group, the majority of applications are from Functional materials segment, which is made up of technology-based business divisions. Furthermore, while the number of applications has been on a downward trend since 2022, the number of patents held has been increasing, in contrast to the number of applications.
This is due to our focus on improving the quality of our intellectual property rights rather than the quantity, by strengthening our open and closed strategy, which we have been pursuing for some time, and by implementing an application strategy in line with our business development.

In order to visualize our strengths, we use PatentSight®, a patent analysis tool from LexisNexis®, to calculate the TR ^* value, which is the value of patents held by our group. The TR value of our patents is high at 2.01 (average value is 1), and is even higher at 2.28 for the Functional materials segment. In addition, looking at the breakdown of our patents, high-value (TR>1) basic patents make up about 50% of the total, and related patents and peripheral patents that strengthen the basic patents make up the remaining 50%, while in the Functional materials segment, high-value basic patents make up about 60% and related patents and peripheral patents make up the remaining 40%. In this way, we form patent groups consisting of high-value basic patents and peripheral and related patents, which strongly protect our core technologies and increase our competitiveness.
In particular, in OLED and lithium-ion battery material businesses, we combine our organic chemistry, inorganic chemistry, evaluation and analysis/measurement technology, industrialization technology, etc. to develop not only our own unique materials, but also a wide range of technologies for their manufacturing methods and applications, and have acquired various basic patents. As a result, our average TR value is relatively high among our businesses.

* Value of a patent (Technology Relevance: TR): Value calculated based on the number of citations (number of citations) in examinations by patent offices in each country (the average TR for all patents is "1").

In order to advance the business portfolio transformation outlined in our current Medium-term Management Plan, one of our important intellectual property activities is to enhance our intellectual property portfolio related to new businesses.
As shown in the diagram below, when we look at the patent distribution of disclosed and registered inventions in our key businesses of next-generation fuels, lithium battery materials, and space solar cells, we can see that in the lithium battery materials business, there are more areas where applications are concentrated in fiscal 2024 (red dashed lines) compared to fiscal 2014, when we first began our joint venture with Toyota Motor Corporation. The same is true for the business areas of next-generation fuels and space solar cells. By concentrating patent applications on key technologies we possess and retaining the rights in this way, we are able to protect our unique technologies and secure a competitive advantage, thereby facilitating commercialization and increasing the likelihood of business success.

●2014/2024 Patent (publication/registration) comparison

Taking the example of space solar cells, one of our innovation creation activities, we are working with our group company Solar Frontier K.K. to carefully examine the intellectual property of materials and manufacturing processes that we have accumulated for terrestrial solar cells, and from there we are selecting and utilizing technologies that can be applied to the space environment. At the same time, we are strategically filing patent applications for new technologies that solve challenges unique to space, such as radiation resistance, and are working to protect our technologies by strengthening our portfolio in both quality and quantity.
When these patents were evaluated using PatentSight®, an analytical tool from LexisNexis®, the Patent Asset Index (PAI), a key indicator, was found to be improving year by year, reaching a record high in fiscal year 2024.
We will continue to work with our research and development department to commercialize the space solar cell business and improve its competitiveness through the acquisition, utilization, and enforcement of intellectual property rights.

●Number of patents held on the topic of space solar cells and trends in PAI

Encouragement of inventions (employee invention rewards)

To increase employees' motivation to invent and promote the creation of innovative inventions that lead to business growth, we have established our own "Employee Invention Performance Reward System," which recognizes inventors who have made a particularly significant contribution to business revenue.
In fiscal year 2024, 19 inventors who made significant contributions to the company's performance in the fields of lubricants, electronic materials, and functional chemistry were honored with the "Employee Invention Achievement Award."

Innovation activities using intellectual property information

The Group's current Medium-term Management Plan outlines a policy for transforming its business portfolio, accelerating steady growth in existing businesses, selection and concentration, and a strategic shift to new businesses. To provide for society, create new markets in the advanced materials business, and provide solutions to social issues, it is essential to utilize internal and external intellectual property information to incorporate new perspectives and ideas. To this end, we are visualizing our intangible assets and identifying technologies and know-how that will contribute to strengthening the competitiveness of our existing businesses. We are also promoting their use in ideation for new businesses and the search for co-creation partners for specific projects. These activities connect knowledge and technology from both within and outside the company, serving as a driving force for nurturing the seeds of innovation with a high degree of certainty.

Human Resource Development

Future intellectual property activities

The establishment of the Innovation Center will further evolve our intellectual property activities in order to accelerate innovation through internal and external co-creation. Business models are diversifying in response to rapid changes in social issues, and as a result, intellectual property strategies, which are an important element of business strategy, must also be more flexible and multifaceted. Furthermore, to avoid intellectual property risks that accompany the invigoration of internal and external co-creation, we must further strengthen governance of intangible asset management across the entire corporation. We have established two pillars: a "function for planning and promoting diverse intellectual property strategies" and a "corporate intellectual property governance function." Based on these, we will put in place the systems and personnel that will lead to more concrete results and powerfully open up the next stage of growth.