TECHNOLOGY TRANSFER CONTRACT

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At the international level Strategic alliances for technological collaboration, operations of measured economic risk that seek to find new sources of innovation, are of great interest. 

The technology transfer contracts (industrial and intellectual property rights or know-how, depending on whether the technology is registered or not) are, in this sense, expansion vehicles for companies that do not wish to make a direct investment in the target country, but do wish to take advantage of the benefits of having a local partner with knowledge of the target market and with resources and know-how that complement their own. 

Generally, transferred technology consists of a combination of registered and unregistered rights. 

Unregistered rights constitute what is known as know-how, which consists of a The set of unrecorded practical information, derived from evidence and experience, that is secret, substantial and determinate. Secret because it is not in the public domain or easily accessible, substantial, as it is important and useful for the manufacture of contract products and, determined, because it is described in a sufficiently exhaustive manner. 

Under the technology transfer contract, the technology owner grants exploitation rights (licence) to a third party or assigns ownership of the technology to a third party (transfer).  In both cases, the provision of technical assistance by the licensor or transferor to ensure the correct application of the transferred or licensed technology should be regulated.

Also, it is appropriate to establish mechanisms for determining ownership andwhere appropriate, the registration of improvements and future developments of such technology and include, in any case, confidentiality clauses (aimed at preserving the secrecy of knowledge and prohibiting its unauthorised disclosure) and non-competition (to discourage the assignee or licensee from using the assigned technology for competitive purposes). 

Fundamentally, in the case of licence to exploit the technology, it is also appropriate toto know the mechanisms that allow us to protect and defend this technology in the local market. both in front of its addressee as against possible violations by third parties. 

Given the complexity of this type of operations at the international level, it is recommended, in any case, receive local technical and legal advice until the completion of the investment project.

Practical recommendation 

Be aware of the protection mechanisms in the destination territory for our technology, when it is to be applied by the local partner, and include in the contract penal clauses, mainly of a dissuasive nature, to avoid as far as possible the breach of confidentiality and non-competition agreements by the assignee or licensee. 

Expert advice 

The strategic alliances for the exchange of know-how (in which we assign or license our technology) constitute forms of international expansion interesting, but which require a prior analysis of some essential issues: 

TO TAKE INTO ACCOUNT IN DETERMINING THE TYPE OF PARTNERSHIP:

• Assignment: transfer of proprietary technology which entails loss of ownership of the technology and prevents its use by the transferor.
• Licence: granting of a right to use or exploit the technology.
• Need for more control over how technology is applied by the local partner.
• Provision of technical assistance.

ANALYSIS OF THE PROTECTION OF TECHNOLOGY AT DESTINATION: 

• Possibility of technology registration. 
• Defence against infringement by third parties.

CONTENT OF THE CONTRACT (ASSIGNMENT/LICENCE): 

• Transfer of ownership of technology/licensing of use.
• Consideration / royalties.
• Territory. Exclusivity regime (licence).
• Technical assistance. 
• Confidentiality and non-competition agreements. 
• Limits to the right granted (licence): right to sub-licence?
• Ownership of technology improvements or developments. 
• Formal aspects: public document and registration.

LOCAL ADVICE, BOTH TECHNICAL AND LEGAL:

• Knowledge of the local partner and its qualities.
• Attention to applicable local regulations.

A technology transfer contract is a legal agreement between two parties, where one party (the transferor) transfers certain knowledge, technology or intellectual property rights to the other party (the transferee). This type of contract is used when a company or entity wishes to acquire or use technology developed by another company, usually with the aim of improving its processes, products or services.

The technology transfer contract should clearly specify the terms and conditions of the transfer, including:

1. Description of the technology: The technology or know-how being transferred, including patents, copyrights, industrial designs, trade secrets or other intellectual property rights, should be clearly identified.
2. Scope of the transfer: It will be established whether the transfer is exclusive or non-exclusive, i.e. whether the transferor may transfer the technology to others or whether its use is limited to the transferee only.
3. Rights and obligations: The rights and obligations of both the transferor and the transferee should be set out, including royalty payments, deadlines for delivery, confidentiality, intellectual property protection and any other relevant aspects.
4. Technical support and training: The provision of technical support and training by the transferor to the transferee may be agreed to ensure proper implementation and use of the transferred technology.
5. Duration and termination: The duration of the contract and the conditions for early termination, as well as the consequences in case of breach by either party, shall be established.

It is important that both parties consult with legal experts and intellectual property specialists to draft and review the technology transfer contract, making sure to protect intellectual property rights and clearly set out the terms and conditions of the transfer.

The technology transfer contract has both advantages and disadvantages for the parties involved.

SOME EXAMPLES OF THESE ARE MENTIONED BELOW:

ADVANTAGES OF THE TECHNOLOGY TRANSFER CONTRACT:

1. Access to technology: It allows the receiving party to acquire know-how, intellectual property rights or technology developed by another entity, which can drive innovation and improve its products or services.
2. Cost reduction: By acquiring already developed technology rather than investing in its research and development, the receiving party can reduce the costs associated with the development of new products or processes.
3. Acceleration of time to market: Technology transfer can enable the receiving party to accelerate market entry by using proven and established technology rather than starting from scratch.
4. Strategic partnership: The technology transfer contract can foster collaboration between companies, which can generate synergies and opportunities for joint growth.
5. Access to new markets: By acquiring technology from an entity with expertise in a specific market, the receiving party can expand its presence and penetrate new markets more effectively.

DISADVANTAGES OF THE TECHNOLOGY TRANSFER CONTRACT:

1. Dependence on third parties: The receiving party may become dependent on the transferring entity for technical support, upgrades or future improvements related to the transferred technology.
2. Confidentiality risks: There is a risk that the transferred information and technology may be disclosed or misused by the receiving party or third parties, which may affect the transferring entity's competitive advantage.
3. Limitations on flexibility: The receiving party may face limitations in adapting and customising the transferred technology to meet its specific needs, as it is acquiring a pre-defined solution.
4. Associated costs: Technology transfer may involve the payment of royalties, licences or fees for the use of the technology, which may increase costs for the receiving party.
5. Legal and contractual risks: The drafting and execution of the technology transfer contract must be rigorous and clear to avoid legal disputes or conflicts between the parties involved.

It is important that the parties involved conduct a thorough analysis of the benefits and risks associated with the technology transfer contract before committing themselves, and consult legal experts and intellectual property specialists to ensure that the contract adequately protects their interests.

A technology transfer contract is required in a number of situations where one entity wishes to transfer technology, know-how or intellectual property rights to another entity.

SOME CASES IN WHICH IT IS COMMONLY USED ARE:

1. Technology licence: When an entity owns a developed technology and wishes to allow another entity to use it under certain conditions and restrictions, a technology transfer contract in the form of a licence may be established.
2. Assignment of intellectual property rights: If an entity has developed an invention, patent, design or other intellectual property and wishes to transfer the ownership rights to another entity, a technology transfer contract is required to formalise the process.
3. Partnership agreements: Sometimes two or more entities decide to collaborate to jointly develop a technology. In such cases, a technology transfer contract may be used to set out the terms and conditions of the collaboration, including the ownership and sharing of the resulting technology.
4. Technology acquisition: When an entity wishes to acquire technology developed by another entity, such as software, computer systems or specific technology solutions, a technology transfer contract is established that defines the terms of the acquisition, the rights of use and the obligations of both parties.
5. Franchising: In the case of franchising, the technology transfer contract is used to allow one entity to grant another entity the right to use its business model, know-how and associated technology in exchange for certain specified payments and conditions.

It is important to note that each situation is unique and the details and terms of the technology transfer contract may vary according to the circumstances. It is recommended to seek specialist legal advice to ensure that the contract is adequate and protects the interests of both parties involved.

LA ARTIFICIAL INTELLIGENCE (SEE+ TIP) CAN PROVIDE YOU WITH HELP AND GUIDANCE IN DRAFTING AND UNDERSTANDING THE TECHNOLOGY TRANSFER CONTRACT.

You can use artificial intelligence to obtain information on the key elements to be included in the contract, such as intellectual property rights, obligations of the parties, restrictions on use, time limits and confidentiality clauses.

Artificial intelligence can also help you to clarify any doubts you may have about the terms and conditions of the contract, as well as to provide you with practical examples and examples of common clauses used in technology transfer contracts.

However, it is important to bear in mind that artificial intelligence is an assistance tool and does not replace specialised legal advice. It is always advisable to consult an intellectual property and contract lawyer to ensure that the contract is suitable for your specific needs and complies with the laws and regulations applicable in your jurisdiction.