Different models to monetize innovations in a globalized market
The case of Japan's Shine Muscat grapes
Japan missed the international filing window for plant-variety rights on Shine Muscat. Under the UPOV system, breeders typically have four to six years from first sale to file for protection abroad. Because Japan failed to do so, the variety can be legally grown overseas, costing an estimated ¥10 billion ($65 million) annually in lost revenue.
Geographical Indication protections can police misuse of place-based names, but cannot prevent cultivation of the same variety under different branding elsewhere. In other words, once plant material escapes unlicensed cultivation, it proliferates regardless of Japan's preferences.
The Export Model
The traditional approach is straightforward: grow premium products domestically and ship them abroad. Japan's $30 Shine Muscat grapes exemplify this—the high price reflects Japanese terroir, quality control, and brand cachet. Domestic producers understandably prefer this model because it preserves their competitive position and captures the whole value chain domestically. The goal is to capture value through scarcity and quality differentiation rather than through IP fees. The problem: perishability limits reach.
The Licensing Model
Japan would authorize vetted foreign producers to cultivate its proprietary varieties under contractual terms, collect royalties, maintain quality standards, and create a year-round supply that Japanese seasons can't provide. These agreements specify quality standards the licensee must maintain, geographic or market restrictions on where the product can be sold, branding requirements, and audit rights to ensure compliance. This approach also addresses the enforcement reality: managed licensing recaptures some value from inevitable diffusion (Shine Muscat leaked abroad to China and Korea).
The Tension
Licensing may generate sustainable long-term revenue streams and brand control, but it also cultivates competitors who may eventually outcompete producers on cost. The knowledge doesn't stay contained, and domestic growers' premium positioning erodes.
Under a pure export model, any knowledge that escapes is incidental leakage rather than a deliberate revenue strategy. Japan didn't intend for Shine Muscat vines to reach Chinese and Korean growers—that was unauthorized propagation that exploited the missed UPOV filing window. The knowledge sharing happened, but Japan captured nothing from it.
This mirrors debates in other IP-intensive industries. Pharmaceutical companies face similar choices about licensing generic production versus defending exclusivity. Luxury brands wrestle with whether controlled expansion causes dilution.