Sharp links its intellectual property, a vitally important corporate asset, with its business and development strategies, and at the same time endeavors to make maximum use of its intellectual property rights, while protecting them to the greatest degree possible. Sharp has also adopted a policy of strictly respecting the intellectual property rights of others.

In addition, regarding inventions devised by employees, Sharp takes into account their level of contribution, and it makes provisions within the company to compensate the employee fairly and appropriately.

Needless to say, intellectual property is a vitally important asset, integral to a corporate entity. It stands to reason that intellectual property must be respected, and when faced with unjustifiable infringement, Sharp operates on the principle of coming to a settlement through negotiations. Nevertheless, Sharp will respond with a resolute attitude to protect its business, and if its intellectual property rights are not respected, Sharp will demand a judgment by a third party, such as a court of justice.

Preventing unfair competition is also an important part of protecting intellectual property rights. In response to the amendment of the Unfair Competition Prevention Law of Japan, Sharp reinforced its in-house regulations to strengthen protection of trade secrets, and to prevent unauthorized disclosure ("leaks") of the production technologies and know-how that the company possesses, which must remain confidential from a business strategy standpoint.

In April 2005, Japan's Patent Law was amended. To comply with the intent of Article 35 of the law, Sharp Corporation consulted with employees before revising its in-house regulations, called the Regulations for Employee Inventions, on July 1, 2005. The revised regulations include more detailed standards on rewarding an employee who has come up with an invention during work for the company, when and after the employee reports the invention and hands over the rights to the invention to the company, which the regulations also require employees to do.

Sharp also is reviewing and revising compensation systems in subsidiaries in Japan, and is working to come up with programs that improve incentives to employees who have made an invention. Sharp is building and promoting systems that compensate employees fairly and appropriately, depending on the contribution their invention makes to the company, as well as each concerned employee's contribution to the invention.