In this section we would like to write some background of two companies IBM and Fujitsu.

By the late 1980s, IBM had dominated the worldwide computer business for more than two
decades. Mainframes had been the core of computer industry, the third largest industry in the
United States after automobiles and oil, and IBM dominated the mainframe business. IBM’s
dominant position had been built on the success of two lines of computers, the system 360
and the system 370.
Fujitsu was the largest computer company in Japan around 1988. The company produces the
other electronic equipment also such as telecommunications equipment, supercomputers,
cellular telephones, and laptop computer. Fujitsu got profit from mainframe sales.
IBM accused that Fujitsu violated the operating system software. But Fujitsu denied that did
not. They have long negotiation around eight months but the result was unraveled. There are
comments from an arbitrator, “It didn’t take long to write down what these two parties agreed
on…They have never agreed on anything, other than to agree that the only way to resolve this
was to get us to solve it.”
The companies disagreed sharply on two matters. One was whether Fujitsu had violated
IBM’s intellectual property rights in the past. Fujitsu vigorously denied IBM’s charges. The
other was whether Fujitsu could have access to certain IBM programming materials in the
future years.
An operating system is a collection of software that controls a computer’s inner workings.
Typically, it coordinates the flow of data between the computer’s memory and peripheral
devices like disc drives, keyboards, and printers, performs basic housekeeping functions for
the computer system, and enables the computer to execute applications programs.
Operating system software stood at the center of the dispute between IBM and Fujitsu. IBM’s
principal charge was that Fujitsu had violated IBM’s intellectual property rights in the
operating system software it had developed. IBM had dominated the world market for
operating system software for mainframe computers.
Operating system software contains two kinds of information.One type tells what a computer
does. The second kind of information tells how the computer does what it does. Fujitsu had
sought the second, more sensitive information because it believed it was necessary for
designing IBM-compatible mainframes, and IBM objected strongly to this.
In the 1970, when Fujitsu developed its first IBM-compatible operating systems, its
programmers made substantial use of IBM programming material. Fujitsu’s later operating
systems, which it developed and introduced in the early 1980s, relied in part on its earlier
systems and the IBM material included in them. IBM first sought U.S copyrights for its
operating system software in 1978. At the time, however, it was unclear whether Japanese or
American copyright law protected operating system software.

Intellectual Property Laws In America and Japan

Legal protection for intellectual property differs between the United States and Japan.
Copyrights, patent, and trade secret laws in the countries differ between the United States and
Japan, as do the legal theories justifying the protection.
A copyright, in essence, protects the expression of an idea. Until 1985, American and
Japanese System copyright protection differed in duration. US law gave works created on or
after January 1, 1978, copyright protection for life of the author, plus 50 years after the
author’s death. Japan formerly protected the work for only 20 years from the date granting of
the copyright, but in 1985 it adopted provisions like those in the United States.
Patents, in essence, protect ownership rights in ways of doing things. Japan and most
industrialized countries gave priority to the first of competing patent applicants to file an
applicant for the patents on the technology. The united States granted the patent to the first
invent.
The application process in the two countries also differed. The US system examined patent
applications in the order in which applicant filled them. Japan examined applications only at
the patent applicant’s request and could defer examination for up to seven years.
Most US states defined trade secrets as any “formula, pattern, device, or compilation of
information used in one’s business and which gives him an opportunity to obtain an
advantage over competitors who do not know or use it.”
US law provided several ways of protecting trade secrets: trade secret and criminal statutes,
explicit contracts such as postemployment noncompetition agreements and nondisclosure
agreements, and implied contracts, created by special relationships such as licensor/licensee.
Japan relied only on contracts.
The many, heated intellectual property disputes between American and Japanese companies
led some observers to seek cultural perspectives on the issues. The most controversial of
these, and perhaps the most common, was the view that Japanese culture sanctioned imitation
to a greater degree than the American.
Proponents of this view emphasized that Japan has borrows extensively from foreign
cultures. Through contacts with China, for example, Japan imitated elements of Chinese
culture, adopting a Chinese style legal code as the basis for the criminal and administrative
codes of its legal system. During nineteenth century, Japan emulated European and American
technology.

Conclusion
IBM is the world largest computer company in the 1982. IBM produced the software and
hardware. It is famous in operating system software during two decades IBM influence the
market of computer in the worldwide. Especially the System 360 and the System 370.It
makes the company prosperous.
Fujitsu was the largest computer company in Japan around 1988. The company produces the
other electronic equipment also such as telecommunications equipment, supercomputers,
cellular telephones, and laptop computer. Fujitsu got profit from mainframe sales.
IBM accused that Fujitsu violated the operating system software. But Fujitsu denied that did
not. They have long negotiation around eight months but the result was unraveled. There are
comments from an arbitrator, “It didn’t take long to write down what these two parties agreed
on…They have never agreed on anything, other than to agree that the only way to resolve this
was to get us to solve it.”
The companies disagreed sharply on two matters. One was whether Fujitsu had violated
IBM’s intellectual property rights in the past. Fujitsu vigorously denied IBM’s charges. The
other was whether Fujitsu could have access to certain IBM programming materials in the
future years.
An operating system is a collection of software that controls a computer’s inner workings.
Typically, it coordinates the flow of data between the computer’s memory and peripheral
devices like disc drives, keyboards, and printers, performs basic housekeeping functions for
the computer system, and enables the computer to execute applications programs.
Operating system software stood at the center of the dispute between IBM and Fujitsu. IBM’s
principal charge was that Fujitsu had violated IBM’s intellectual property rights in the
operating system software it had developed. IBM had dominated the world market for
operating system software for mainframe computers.
Operating system software contains two kinds of information.One type tells what a computer
does. The second kind of information tells how the computer does what it does. Fujitsu had
sought the second, more sensitive information because it believed it was necessary for
designing IBM-compatible mainframes, and IBM objected strongly to this.
In the 1970, when Fujitsu developed its first IBM-compatible operating systems, its
programmers made substantial use of IBM programming material. Fujitsu’s later operating
systems, which it developed and introduced in the early 1980s, relied in part on its earlier
systems and the IBM material included in them. IBM first sought U.S copyrights for its
operating system software in 1978. At the time, however, it was unclear whether Japanese or
American copyright law protected operating system software.
IBM and Fujitsu disagreed sharply about whether Fujitsu was right to use this information in
developing its early operating systems. The laws of two countries about intellectual property
are different. They have the law about copyright, patent and trade secret laws are clear but
about computer software was not clear. Copyright infringement is the violation of any of the
copyright owner’s exclusive rights. Japan permitted uses of copyrighted material that
American law scrutinized more carefully.
Moreover Japanese has imitation culture in the history. First from the China, Japanese
imitated the culture, legal code. Second, during nineteenth century, Japan emulated European
and American technology. The imitation artists, the Zen tradition of repetition of a task to
yield master and so on.
Look at the background of two companies we realize not only the matter of companies but
also the law of country, the culture and ethics. After reading this case study we also difficult
to judge which one is right and which one are wrong. Through the eye of business ethics we
can see one has to confess. Even though, we have own culture, law and understanding when
we do business worldwide we should learn and know the other culture and law. The
arbitrators’ challenge was compounded by the acrimony between the companies. One
arbitrator commented: “These two parties have hardly been able to agree what color a
stoplight is.”