Skip to content

Technology Transfer Agreements

Technology Transfer Agreements :

Technology is a complex concept. According to UNIDO Guidelines Paper: “Technology or know-how denotes the sum knowledge, experience and skills necessary for manufacturing a product or products and for establishing an enterprise for this purpose”.

In a broader sense, technology is viewed as any systematic or practical knowledge, experience or skills used for – (i) manufacture of products or application of processes; (ii) commercial or management purposes in industry; and (iii) the achievement of any desired result, be it industry or social areas of life.

It is universally recognized that an inflow of technology, whether appropriate or advanced, is necessary into a developing country for ensuring economic self-reliance to main the rate of progress of development. The concept of ‘transfer of technology’ is a complex phenomenon necessarily involving rights, obligations, privileges and commitments of the parties to the transaction.

The basic legal document is the Licence Agreement for transfer of technology. The other commonly used modes of technology transfer are technical assistance agreement, patents and patent agreement, know-how agreement, engineering services agreement, the trademark agreement and the franchise agreement.

Licence Agreement is a formal instrument that serves several purposes. From it flows the legal rights and obligations of the parties to the transaction. Therefore, it is – (a) a statement of the expectations of the parties that have come to achieve a common specified purpose; (b) a memorandum defining the rights and responsibilities of the parties, ensuring adequate commercial benefits to them; (c) a prescription for resolving conflicts that may be anticipated in certain areas; and (d) a legal document whose provisions and undertakings can be enforced under the laws of the country in the context of which it is framed.

License may be granted for IP that is necessary to further develop, reproduce, make, use, market, and sell products based on the technology to be transferred. The terms and conditions of a licensing agreement determine the success of the technology transfer. Therefore, while formulating the licensing agreement, the parties involved should define the technology to be transferred without any ambiguity. Certain factors to be considered while defining the technology in the licensing agreement include:

• type of the technology i.e. product, process, facility, software, formula, etc.;

• need for additional license for practicing the technology;

• industrial standards or specifications associated with the technology; and

• details required to practice the technology.

Other factors that need to be considered for a successful technology licensing are:

• owner/s of the technology;

• nature of ownership;

• other non-exclusive or exclusive licensing associated with the technology;

• assistance required from the licensor to further develop or practice the technology;

• other IPRs such as trademark, copyright, trade secret, etc. associated with the technology;

• nature of technology (e.g. stand alone technology, platform technology);

• scope of rights expected from the technology license;

• territory and industry in which the technology can be utilized; and

• terms and value of royalty, etc.

Moreover certain restrictive trade practices are mainly used under the guise of intellectual property licensing. As mentioned earlier, these restrictive practices distort competition in given market. A detailed discussion on restrictive practices under intellectual property licensing has been given above.

Leave a Reply