I spent an enlightening week in Tokyo earlier this month participating in the Kauffman Fellows Japan Summit. This summit was the brainchild of three visionary Kauffman Fellows who are on a mission to instill entrepreneurship into the Japanese culture. During the three days we heard about the current (dismal) status of venture capital and entrepreneurial success in Japan—especially in the life sciences—in contrast to the unbelievable track record of Japanese engineering and precision manufacturing, as well as the country’s output of patents, which rivals that of the U.S.

Walking around Tokyo and interacting with the many smart minds at the summit, I had to scratch my head—at first blush, the ingredients of great entrepreneurship in life sciences are there. But why is there no soup? One of the most staggering statistics presented at the meeting was that just $200M was invested in local life science companies in 2008, with one pharma spin-out venture taking half the total!

And then it started to sink in how privileged we are in the Boston area, where the next successful or aspiring entrepreneur, scientist, engineer, venture capitalist, IP or venture lawyer, skilled technician, teaching hospital, pharmaceutical company, or device company is just a door away. We are steeped in this culture of entrepreneurship and have been so for many years now. This Boston life science ecotope is as unique as Silicon Valley is for the techies, and it behooves us to make sure we take full advantage of this incredible competitive edge.

People outside of our unique Boston ecotope understand how powerful our “soup” is—Japanese investors searching for attractive opportunities in private equity and venture capital are looking first to the U.S., then checking out Europe and China, only to search their own home market last. How discouraging that must be for the few life sciences pioneers in Japan! I will make it a habit now to remind folks in our industry, as well as local government officials, that we should cherish what we have and work hard to keep things intact and healthy.

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In the past week, the Northwest has seen its share of debt financings in medical devices and bio-IT, small funding deals and partnerships in Internet software, and mounting interest in an impending IPO.

—Amazon (NASDAQ: AMZN) rolled out a new mobile payments service that lets applications developers and distributors tap into the e-commerce giant’s one-click checkout system on mobile devices. As part of the rollout, Amazon has formed partnerships with mobile content distributors like Kansas City, MO-based Handmark, which sells games, apps, ringtones, and the like. Financial terms were not given.

—Seattle’s Theraclone Sciences formed a partnership with Tokyo-based Zenyaku Kogyo, worth up to $18 million over time, to discover antibodies that could protect millions of people in a flu pandemic, as Luke reported. Under the deal’s terms, Theraclone has given Zenyaku an option for exclusive rights to new flu antibodies in certain Asia-Pacific countries, while Theraclone gets an undisclosed amount of upfront cash and royalties on future product sales in Zenyaku’s territories.

—Seattle-based Omeros, the developer of anti-inflammatory treatments and other biotech therapies, is on the docket to go public this week and raise more than $80 million, as Luke reported. The company is also defending itself against accusations from its former chief financial officer that it filed false records with the National Institutes of Health and then wrongfully terminated him after he reported it to the board’s audit committee under the company’s whistleblower policy.

—Seattle-based Teranode raised $900,000 in debt financing, as Luke reported. The investors weren’t disclosed, although Bellevue, WA-based Ignition Partners has invested in the past. Teranode, a maker of software to organize life sciences labs, was founded in 2002 out of the University of Washington.

—Seattle-based Founder’s Co-op, a seed-stage investment organization, has backed two local Internet startups, Nearlyweds and BigDoor Media. Financial details of the deals were not announced, but Founder’s Co-op says it typically invests $250,000 or less in its portfolio companies.

—Redmond, WA-based Spiration raised $7 million in debt financing out of a $10 million offering, as Luke reported. The financing came from the company’s partner in Europe and Japan, Olympus Medical Systems. Spiration, which makes an implantable device to treat deadly lung diseases like emphysema and chronic bronchitis, has raised about $97 million since its founding in 1999.

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Kirkland, WA-based Clearwire (NASDAQ: CLWR) announced today it has signed a collaborative agreement with UQ Communications of Japan and Yota of Russia to support international roaming between the three WiMax operators. Financial terms were not disclosed. WiMax is a next-generation wireless broadband service, which Clearwire is rolling out across the U.S. Clearwire also has partnerships with YTL Communications of Malaysia, wi-tribe of Pakistan, Vee Telecom of Taiwan, and Global Mobile of Taiwan.

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Taxes aren’t fun for anyone, but recent events have put online retail leviathan Amazon.com in a “Boston Tea Party” mood.  In the digital age, what does “physical presence,” the usual definition of a taxable company, really mean?

—Amazon may owe 14 billion yen, or about $119 million, to Japanese tax authorities according to the Japanese newspaper Asahi Shimbun. Accusations have been laid against Amazon since 2007, but now the situation is much more serious, with Japan accusing Amazon of making sales as though products bought in Japan are being purchased in the U.S. and are not subject to Japanese tax law—despite the presence of two Amazon affiliate companies in Japan. This, according to Japan, violates the rules of an American-Japanese tax treaty.  Amazon has so far rejected the claim and is negotiating a deal with Japanese authorities.

—Things stateside aren’t much better. Amazon may owe millions of dollars to Texas in uncollected sales tax, according to the Dallas Morning News, and is currently being investigated by the comptroller’s office. Since May, the state has been checking to see if Amazon broke the law allowing sales tax to be levied on companies with a physical presence in a state, but Texas didn’t even realize Amazon had a distribution center in the state until May. Ironically, Texas only began to investigate Amazon after Amazon cited the same law it may be breaking there as its defense in New York, where it brought suit against the state because of a new law charging the company for sales tax even though it had no physical presence in the state. In January, the suit was thrown out of court.

—Unhappy with the New York decision, Amazon announced in June the shutdown of its Amazon Associates program users in both North Carolina and Rhode Island after both states passed similar laws. Users of the program place ads for Amazon products on their website and receive a commission from Amazon for each product bought through the site.  Amazon called the law in Rhode Island “an unconstitutional tax collection scheme.”

And things may even get worse, according to the annual report released in April by Amazon that warns of similar investigations in the state of Kentucky, and in Britain, France, and Germany.

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Woodinville, WA-based Loctronix revealed a new alliance with Japanese company NEC Magnus Communications that will allow NEC to use the single-chip, multiple source GPS technology developed by the American company in its products.  The new products will be part of the effort by the Japanese government to create a “ubiquitous society,” where all of Japan will be able to quickly access information from a nation-wide network.  Financial details of the partnership were not released.  Loctronix was founded in 2006 to develop GPS technology.

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Seattle-based MOD Systems, a maker of digital media delivery technologies for retailers, announced today it has opened a subsidiary in Tokyo. MOD Systems Japan will work with the company’s strategic investors, Toshiba and NCR, to drive business development in Japan. MOD raised $35 million from its investors in September, in a deal that has come under scrutiny in an ongoing lawsuit against MOD and its top executives.

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Seattle-based MOD Systems, a maker of digital-media delivery technology, announced it is demonstrating its product at Retailtech Japan 2009 in Tokyo, the country’s largest retail IT event. Toshiba and NCR, which are investors in MOD, will jointly present MOD’s system for downloading videos from a touch-screen kiosk to SD memory cards.

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Japan’s second-largest cellular operator, KDDI, is adopting the next-generation, Long-Term Evolution, or LTE, wireless standard founded on San Diego-based Qualcomm (NASDAQ: QCOM) technology. KDDI is deploying LTE equpment from Hitachi and Nortel that will provide an overlay to its existing CDMA mobile network.

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With baseball’s Fall Classic about to begin (hats off to the Tampa Bay Rays), deals in the Northwest have continued to pick up. No blockbusters in the past week, but there was decent action in tech mergers and acquisitions, as well as funding of biotech and energy companies.

—Bob reported on the top 10 venture deals of the third quarter in the Northwest. Although the total amount of funding in the region is down, Seattle saw some large deals, such as Big Fish Games’ $83.3 million financing and AltaRock Energy’s $26.25 million round.

—GrapeCity, an international software firm with U.S. headquarters in Kirkland, WA, acquired Columbus, OH-based Data Dynamics for an undisclosed amount. The transition will begin in January. GrapeCity partners with Microsoft to make software tools and services for businesses.

—Seattle-based TrackSimple raised $2.5 million in Series A financing, led by Ignition Partners. TrackSimple makes a software platform that captures customer events, aggregating data almost in real-time.

—Luke reported on the dollar amount of the Imperium Renewables financing, which we reported earlier this month was being used to settle debts with the Seattle biodiesel maker’s creditors. According to the Seattle Times, which cited a regulatory filing, Imperium raised more than $18 million from its investors last month.

—Electro Scientific Industries, a photonics company based in Portland, OR, is merging with Middlefield, CT-based Zygo, a metrology and optics firm, in an all-stock transaction. The merger is expected to be complete in the first quarter of next year.

—Micronics, a Redmond, WA, maker of molecular diagnostics and monitoring tools, closed a Series C financing round led by the Southwest Michigan First Life Science Fund. Combined with a Series B round raised earlier this year, the deal brings $9 million in capital to Micronics.

—Bothell, WA-based Winshuttle, a maker of data-entry software for businesses, acquired ADAR, a French distributor of data-management tools, and launched a new office in Paris. Winshuttle’s French operations will provide sales and technical support to European customers.

—Seattle Genetics, a Bothell, WA, developer of targeted cancer drugs, received a milestone payment from Progenics Pharmaceuticals, as Luke reported. Progenics bought a license to the Seattle Genetics technology and has used it to develop a drug candidate that is in clinical trials for hormone-resistant prostate cancer.

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GrapeCity, an international software company with U.S. headquarters in Kirkland, WA, announced it has acquired Columbus, OH-based Data Dynamics. Financial terms were not disclosed, but the transition will begin in January 2009. GrapeCity is based in Japan and partners with Microsoft to build software tools and services for businesses.

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It’s 10:15 pm, and Patrick Ennis is in a taxi bound for the airport in Delhi, India. He’s getting ready for a 1:00 am flight to Beijing. The streets of India are legendary for displaying 2,000 years of transportation history in one place—animals, pedestrians, carts, bikes, cars, buses, trucks—and it sounds like tonight is no different. “I learned to drive in New York, but this is much harder,” says Ennis. Though it’s late at night, he adds, “It’s still 10 times as much traffic as Seattle.”

Ennis is the global head of technology for Intellectual Ventures, the Bellevue, WA-based firm focused on invention. He joined about six months ago; before that, he was a managing director at Seattle-based Arch Venture Partners, where he funded and built technology startups, many coming out of universities and national labs. And before that, he held senior positions in technology and business at Lucent Technologies, AT&T, and Bell Labs. He did his Ph.D. in physics at Yale, and did scientific research for about eight years before joining Bell Labs.

As we reported last week, Ennis is currently part of a high-powered traveling team that includes Intellectual Ventures co-founders Nathan Myhrvold and Edward Jung. They are on a three-week, five-country tour of Asia to meet with the local communities and launch new offices there. I hope to sit down with Ennis for a more comprehensive discussion after he returns, but in the meantime here are some thoughts he provided by phone—through a dicey wireless connection in Delhi. He touched on some details from the tour, his impressions of the various Asian cities (including the food), and how the VC industry compares with the invention industry.

Ennis said he’d been in Tokyo, Singapore, and Delhi so far, spending three to four days in each city. Next up: Beijing and Seoul. “We’re in the middle of our tour,” he says. “It’s going very well. Our focus on invention is being well-received here, it’s truly a global world now.” Ennis says that in each city, they’ve been putting on events where they have a reception and invite local inventors, university professors, and administrators of research institutions. They’ve also been meeting with local university officials privately. “We have an inventor network we’re building in Asia…We want to get to know the whole ecosystem…and we do presentations. It’s like in Silicon Valley, you invite people who are interested in what you’re doing, to mingle and network.”

Ennis is no stranger to Asia. In the mid-to-late ’90s, he worked in optical networking and sold a lot of products to Asian national carriers like Korea Telecom. And when he was at Arch Venture Partners, several of the firm’s portfolio companies had partners in Asia. So Ennis has worked in places like Taipei, Tokyo, Shanghai, Beijing, and Singapore. “A trend you see more is VCs, even if they don’t have formal offices or deals in Asia, spend more time there,” he says.

He didn’t give details of his meetings this week, but he provided some general impressions. “Asia is so dynamic in terms of growth, innovation, and optimism,” Ennis says. “The energy here is palpable, it’s similar to the energy that exists in places like Seattle and Silicon Valley, both in the technology …Next Page »

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When I visited Nathan Myhrvold in the summertime, he lamented that he wasn’t able to attend the Olympics in Beijing (though he did provide some insight into the physics of ping-pong matches). But this week and next, Myhrvold is taking a grander tour of Asia, as his Bellevue, WA-based invention company, Intellectual Ventures, opens a series of new offices in the region. It is the firm’s first major foray into the global market, with the goal being to amplify its focus on investing in technological invention as a key commodity and driver of innovation.

To that end, Myhrvold (an Xconomist) and Edward Jung, the founders of Intellectual Ventures, are in the midst of hosting office launches and events this month in five Asian countries. The company’s new regional headquarters is in Singapore, with additional offices located in Tokyo, Japan; Bangalore, India; Beijing, China; and Seoul, South Korea. Each office will be staffed by roughly seven to 10 people. “I am struck by the gap between Asia’s collective, innovative talent and the lack of resources for Asia’s greatest inventors. IV is working to fill this gap,” said Jung in a statement.

So what exactly will Intellectual Ventures be doing there? As Myhrvold told me previously, “Most inventing organizations like universities and nonprofits have a tech transfer office or a technology licensing office. Most institutions in Asia don’t.” Intellectual Ventures, he said, wants to “be an outsourced tech transfer agent for inventing institutions that don’t have one. We can provide the same functionality that you’d get from a technology licensing office. We evaluate ideas, we pay for them to be patented, we provide a little bit of funding for them, and then we license them. There’s no reason that smart people in Asia shouldn’t be able to get the same traction that Stanford provides.”

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The global network of 34,000 content distribution servers built by Cambridge, MA-based Akamai allows the company to gather massive amounts of data on Internet usage—information that it distilled and published for the first time back in May. Now the company has published its second quarterly “State of the Internet” report, detailing trends such as the number of Internet-connected devices and broadband connections in each country and providing a fascinating overall picture of the Internet and its growing pains. While the number of people and organizations using the global information network continued to increase, for example, so did the volume of attack traffic and malware.

In addition to statistics collected by Akamai’s servers, the report brings together numerous published reports of incidents around the Internet—such as the repeated Internet outages in Vermont in May and June as equipment failures, fires, and bridge construction damaged a fiber ring owned by Level 3 Communications, and the bizarre story of the Epilepsy Foundation website, which was hacked by attackers who posted hundreds of flashing images designed to induce seizures in visitors with photosensitive epilepsy.

But the most valuable part of Akamai’s report is the data from its own network—information that can’t be found anywhere else. While China was the largest source of attack traffic in the first quarter of 2008, for example, Akamai found that Japan leaped into first place in the second quarter; some 30 percent of all worms, viruses, and denial-of-service attacks originated from Internet addresses there. (China fell to third place, while the United States hung on to its second-place status, generating 22 percent of attack traffic.)

The number of unique Internet Protocol addresses detected by Akamai’s network—each address representing a separate Internet-connected device—grew 5 percent in the second quarter, to some 346 million worldwide. Nearly 30 percent of those addresses were in the United States, and about 10 percent were in China, with Japan, Germany, France, the United Kingdom, South Korea, Canada, Spain, and Italy next in line. But when IP addresses are measured per capita, the Scandinavian countries continued to lead: Sweden leads the world with 0.42 unique IP addresses per citizen, followed by Norway, Iceland, and Finland. The United States is in seventh place with 0.34 IP addresses per person.

Akamai also tracks the speed at which the citizens of various countries can access the Internet. South Korea held on to its lead in this area, with 64 percent of all Internet connections boasting a speed of 5 megabits per second or more. The United States places sixth globally in broadband penetration, with only 26 percent of all connections beating 5 megabits per second, though the number of broadband connections here is increasing fast (the 26 percent figure is a 29 percent improvement on the first quarter).

Within the United States, two of the smallest states, Delaware and Rhode Island, continued to have the largest proportion of citizens enjoying broadband: 66 percent of all Internet connections in Delaware exceed 5 megabits per second, and 43 percent in Rhode Island. New York, Connecticut, Oklahoma, Nevada, New Hampshire, Massachusetts, Pennsylvania, and the District of Columbia round out Akamai’s “Top 10″ list of U.S. states with the largest percentage of broadband connections. At the opposite, “narrowband” end of the spectrum, the state of Washington tops the list once again, with 21 percent of all Internet connections taking place at the glacial speed of 256 kilobits per second or less. (Greg has more to say about that over at Xconomy Seattle.)

Akamai’s full report is available here. How quickly you can download the 1.5-megabyte PDF file will depend, of course, on where you live.

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Acucela has struck another big deal with its Japanese connections. The Bothell, WA-based biotech company said today it has agreed to form a partnership with Tokyo-based Otsuka Pharmaceutical to develop its lead drug candidate for the top cause of blindness among the elderly—the “dry” form of macular degeneration.

The deal has sweet terms for Acucela. It will receive $5 million in upfront cash and milestone payments worth $258 million from Otsuka if the drug, ACU-4429, reaches certain goals in drug development. Otsuka has agreed to pay all the drug development bills through the beginning of Phase III clinical trials, and then it will split the future expenses for development equally. The companies will also equally divide the expenses and profits from sales of the drug in North America, while Acucela keeps all rights in Europe and Otsuka gets exclusive rights in Asia and the rest of the world.

The partnership is a coup for Ryo Kubota, a native of Japan and a former University of Washington ophthalmologist who left to start Acucela in 2002. It brings a new level of resources from a company with $9.2 billion in annual revenue last year, and experience marketing big products like Abilify, a $2 billion-a-year drug for schizophrenia and bipolar disorder. The deal also could provide a lift for patients with the “dry” form of macular degeneration, a gradual loss of vision caused by yellowish buildups and a loss of pigment in the retina. The dry form of the condition has no approved treatment, and damages the eyesight of more than 20 million people worldwide. That number is expected to double in the next 20 years, as populations age around the world.

“Otsuka and Acucela have a similar vision and commitment in development of opthalmic drugs,” Kubota said in an email from Japan. “Otsuka has a strong and successful history of marketing opthalmic drugs in Japan and now they are expanding their opthalmology franchise globally. Having a common vision is critical for the success of a long-term collaboration.”

Acucela’s experimental drug is meant to be taken as an oral pill. It’s unlike other treatments for the “wet” form of macular degeneration in which leaky blood vessels damage eyesight. That form of the disease is treated with Genentech’s Lucentis and Avastin, drugs that block the growth of abnormal blood vessels, yet need to be given with injections behind the eye. …Next Page »

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Yesterday, we ran the first half of a sit-down interview with Nathan Myhrvold, cofounder and CEO of Intellectual Ventures, the Bellevue, WA-based invention laboratory and investment firm. Myhrvold, the former CTO of Microsoft (and an Xconomist), placed his current company’s goals in the context of venture capital and private equity, arguing that there is a real need to create what he calls an “invention capital” industry.

In what follows, Myhrvold talks about the lessons he learned in forming Microsoft Research, the differences between research and invention, some ambitious and far-out projects from Intellectual Ventures (e.g., invisibility, geo-engineering), and the motivation behind his firm’s upcoming expansion into five Asian countries.

Xconomy: Before we get into specific projects and inventions, what all did you learn from Microsoft Research that’s applicable to Intellectual Ventures?

Nathan Myhrvold: I have a theory that R&D is a great investment, a fundamentally good business. Using the human mind to go from nothing to something is a hell of a trick. And there’s nothing fair about it. A guy like Einstein can come up with all these things, but so can people who aren’t actually all that smart! There are people dumber than Einstein who’ve made amazing contributions.

So I believe you can make money with research, or invention. But you need a certain scale factor. Let’s say I have this idea called life insurance. If I just insured your life, it wouldn’t be worth it to either one of us. Insurance is fundamentally a risky bet, and to make it reasonable, what you’re buying and selling is variance. You need to have a large end limit to shrink the variance down. With Microsoft Research, I came to the conclusion that research could have been enormously profitable for Bell Labs, IBM, and others. It was profitable, but it could have been even more profitable. Xerox PARC could have made Xerox one of the most valuable companies on Earth. But most people screwed it up.

And after screwing it up, the lesson was mislearned that it’s impossible to be successful in this way. Most of Silicon Valley turned away from the notion of trying to do anything new. The implicit attitude was, hey, that’s why Stanford exists, somehow they’ll come up with new ideas. We’ll wait until that occurs. And then when companies got bigger, the size of Oracle or Sun or Apple, they said, “Well, keep doing that. Screw it, we’re not actually going to do anything really exciting.” And I thought, no that’s the wrong thing to do. If you have the scale at which you can afford to wait 5 to 10 years for a result, that was the key thing. If I say, invent something or do valuable research tomorrow, that’s an impossible task. But if I say, support 100 really smart people working really hard for 5 years, something great will come of it.

X: That’s what you had at Microsoft, because of its size.

NM: At Microsoft, we had the resources to do that. So I talked Bill [Gates] into starting Microsoft Research. It’s been hugely successful; they would say it’s one of the best investments they ever made, enormous customer value and shareholder value…To sum up, Microsoft Research is based on a similar idea [as Intellectual Ventures], with one twist. There, all I had to do was convince one man, and we could go ahead. After I retired from Microsoft, I wanted to keep going. I no longer had the one man to convince to do the whole thing. If you think about how to replicate the model, even if I’d gotten Bill to give me more money to do something else, that wouldn’t be the replicable model. So that’s where I came back and said OK, how could you do this on an even broader scale?

It turns out the way the world does this on a broad scale isn’t by saying this will be done by a government agency or by Bell Labs, a research lab funded by a monopoly business. In fact, the modern way to do it is to create one of these marketplaces where large investors are willing to put a small fraction of their income towards really risky things. And so …Next Page »

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Netcracker Technology, a Waltham, MA, company that makes software used by telecom companies to manage order fulfillment and other operations, announced today that it will be acquired by Tokyo-based electronics and communications giant NEC. The companies didn’t disclose the terms of the deal.

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Spiration, a Redmond, WA-based maker of medical devices for lung diseases, said it signed a deal to allow Tokyo-based Olympus to distribute its minimally-invasive device for emphysema patients in Japan. Financial terms weren’t disclosed, although Olympus will pay for clinical trials needed in Japan, and file applications to regulators there, Spiration said. The two companies are already preparing to commercialize the device, called the IBV Valve System, in Europe this fall, as we discussed earlier this month.

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Japan Challenges Detroit on Green Cars

General Motors is working hard at putting its electric car, the Volt, on the streets by 2010. But Business Week wonders if Detroit will be able to catch up to Japan’s lead on green cars. Toyota, for instance, is planning to double its sale of hybrids in the early part of the next decade.

14 Science Questions for Would-Be Presidents

A group called Science Debate 2008 continues to push candidates John McCain and Barack Obama to have a debate solely on science. To that end, they’ve sent the presidential contenders a list of 14 questions they’d like such a debate to cover. Wired prints the questions, which cover subjects from energy to stem cells to space exploration.

Public Cares About Science, Poll Shows

The vast majority of people polled by the group Scientists and Engineers for America said that it’s important to base policy decisions on topics such as health care and global warming on science, says Discover Magazine. But the magazine’s blog wonders whether the public would be as enthusiastic about science if they were asked questions about paying taxes to fund it.

Groups Sue Government Over Cell Phone Tracking

The American Civil Liberties Union and the Electronic Frontier Foundation are suing the Department of Justice for access to records about the agency’s tracking of cell phone users. The New York Times reports that the groups filed suit this week in U.S. District Court in Washington. The ACLU had filed a Freedom of Information Act request last November, but Justice has not yet delivered the documents.

Solar Plant Moratorium Reversed

After an outcry from the solar power industry, the federal Bureau of Land Management has lifted its recently announced ban on new solar energy projects on public lands. The BLM had placed a two-year moratorium on such projects so it could study their impact. CNET News says the bureau reversed course on Wednesday.

Order on YouTube Records Raises Privacy Worries

A court order to Google to release massive amounts of data about YouTube users has privacy advocates concerned, according to TechCrunch. The order came in a lawsuit between Viacom and Google, in which Viacom contends that YouTube violated its copyrights. The order seeks the name and IP address of every YouTube user, along with a list of the videos that person has watched.

Will Hydrogen Push Aside Gasoline?

Hydrogen is being touted as the transportation fuel of the future, powering cars without polluting the atmosphere or entangling the U.S. with foreign countries. But Scientific American, reviewing the issues surrounding hydrogen, says the jury is still out on whether hydrogen can actually replace gasoline. The big question: Can hydrogen be generated and stored on a practical scale?

Demand for High-Speed Internet Slows Down

With 55 percent of adult Americans already having high-speed broadband at home, new demand for broadband Internet access has slowed to a crawl, reports GigaOm. Citing a recent study from Pew Internet, the site also says low-income groups are cutting back on their broadband spending.

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It’s International Week for the local Internet video cluster. Yesterday we reported on ExtendMedia’s deal with Bell Canada enabling Canadian Internet users to download movies on same day the films are available on DVD. Now there’s news that Cambridge, MA-based Brightcove is opening a subsidary in Japan.

Brightcove, founded in 2005 by former General Catalyst partner and Allaire Corp. founder Jeremy Allaire, offers a Web-based platform that content owners and independent producers in North America and Europe use to distribute video to customizable players on consumers’ desktops. The new Tokyo-based subsidiary, to be called Brightcove KK, will offer a localized version of the service to Japanese households, more than 50 percent of which have broadband Internet access.

The company said in an announcement that Brightcove KK will be backed by a $4.9 million investment from Brightcove itself and from four Japanese strategic partners: Dentsu, J-Stream, Transcosmos, and Cyber Communications. Many types of enterprise software and services in Japan are purchased through established software distribution channels, and all of the partners except Transcosmos will also be sales agents for Brightcove KK.

“By combining the proven Brightcove technology with the capabilities of our partners, Brightcove KK will give media companies and marketers in Japan a unique solution for implementing their online video strategies and unlocking the potential in the market,” Allaire said in the announcement.

Brightcove may find as soon as it arrives in Japan that it already has competition from its Cambridge, MA, neighbor Maven Networks, which has existing deals with several Asian companies and was acquired in February by Yahoo, which has a strong presence in Japan.

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Cambridge, MA-based Basis Technology, which develops software for multilingual information retrieval, reported today that the Appeals Court of Massachusetts has ruled in its favor in a long-running lawsuit against Amazon involving Basis’s compensation for providing consulting services relating to the formation of Amazon’s Japan operations. Although exact terms of the settlement were not disclosed, a Basis press release stated that Amazon, one of its early investors, will be forced to give up its board seat and rights as a preferred shareholder. Basis will also received an unspecified amount of financial compensation, the release said.

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