IP Policy & Strategy

Since our founding, SATO has always sought to offer products and services that solve operational problems in the spirit of Ceaseless Creativity. In the process of developing tagging-based solutions for customers, we have created a broad portfolio of intellectual property including patents, designs, trademarks and technical know-how. These assets are key strategic resources that strengthen our competitiveness now and into the future.

To protect these resources, we have established a global policy with actions set out as follows, which we will use toward securing freedom to operate and increasing our corporate value to contribute to a better and more sustainable world.

We encourage creative work throughout our group so as to drive the creation of intellectual property that benefits our group businesses while maximizing its use to pursue sustainable growth.

We comply with laws governing patents, utility models, industrial designs, trademarks, copyright, trade secrets and employee know-how in different countries, making sure we respect the valid intellectual property rights of third parties to minimize any related risks.

We educate employees to increase their awareness about intellectual property and enable more intellectual property activities.

In our materiality assessment, we have expressed our commitment to creating shared value (CSV) through our core business to address shared challenges in society. We aspire to create value for both society and the company through innovation, supported by a robust approach to intellectual property (IP) management led by our IP Department. Guided by its medium-term plan, the department oversees all IP-related initiatives, ensuring our intangible assets are strategically developed and utilized in alignment with the company's broader business goals and medium-term strategies. It engages in company-wide collaboration to create intellectual assets that grow our current business while working to put strategies and plans into action to enhance IP governance.

As we make and sell our products, we strive to improve them to deliver more advanced solutions that address customer pain points. This is our focus for both business and IP. Such efforts have sustained patent applications associated with our solutions at high levels, raising the three-year average through FY 2025 to more than two times that of FY 2014.

We are also eager to produce IP for the future as part of our strategic investment in seeking sustainable growth. In our nonlinear, trial-and-error process to innovate and expand into adjacent markets, we are using IP landscapes^*1 increasingly to strategize how we create intellectual assets for competitive differentiation and strengthen our IP portfolio both in and outside Japan. We are also applying business intelligence in IP and market analysis to support informed decision-making when considering new businesses or partners for innovative tagging.

With an emphasis on protecting and leveraging the creative outputs we produce from solving customer pain points, we have been working to increase our patent utilization rate. Also, we regularly review and update our patent portfolio with newer, more valuable patents for patent quality. This helps keep our portfolio focused, aligned with our business goals, and supportive of both profitable growth and better capital efficiency. As a result, our patent utilization rate continues to rise steadily against the industry average (which we use as our benchmark), achieving a good balance between current business relevance and future value creation.

While we seek stronger patent protection to reinforce our global growth, the number of patents we hold in key countries outside Japan has grown rapidly such that by the end of FY 2025, it is already more than 2.5 times that of FY 2014. This corresponds with the bigger role our overseas business now plays at the group level. It brought in almost 50 percent of our consolidated sales in FY 2025, up from just around 30 percent in FY 2014.

To motivate even more intellectual creations and inventions that contribute to customer value and our competitive advantage, we have made invention awards part of our annual in-house awards for recognizing Ceaseless Creativity. Themed "Involving everyone in innovations to make SATO stronger," the Invention Awards ceremony shows our appreciation and commendation for employees who produce outstanding inventions with actions and efforts that embody Ceaseless Creativity. Through the awards, we also learn from the awardees and find inspiration for new challenges, thereby fostering a corporate culture of innovation. As a result, we see more and more employees participating in intellectual creations, leading to a steady increase in the number of first-time inventors in the company.

In 2026, we recognized employees for producing and contributing to inventions that are technically outstanding or commercially valuable — and that help create new value to solve real customer challenges. Examples include a technology used in producing RFID labels and an RFID reader system that improves inventory tracking and storage. This annual event allows for awardees to share the hard work and creative process behind their inventions and for the management team to celebrate employee achievements with everyone.

As society changes, our customers' needs change too. In using IP to protect and leverage the value we create today (exploiting our current business capabilities) and tomorrow (exploring opportunities for future growth), we believe we can improve our competitiveness and will continue doing so to create a better and more sustainable world and raise our corporate value over the long term.