Trade Secret, Traditional

Knowledge and Technology

Transfer(Hons.)

Faculty : Dr. Aarti Vyas Bhatt

Unit 3 : IPR & Transfer of
Technology
Introduction
• Technology transfer involves more than a license to a patent; it
means moving the technology from the inventor’s laboratory into
the licensee’s laboratory.
• This "hands-on" process involves the conveyance of know-how and
technical ability more than a written description of experimental
results.
• The inventor must be actively involved in all stages of the process,
from working with patent attorneys to assessing prospective
licensing candidates.
• In the early stages, the inventor must be able to build solid working
relationships with scientists or technologists at the prospective
licensee and maintain them over the early stages of company
involvement with transfer.
• If no potential licenses are readily apparent but
the Technology Transfer Office (TTO) determines that there is
commercial potential and decides to pursue patent protection, our
team will work with the inventor to draft a non-confidential
description of the invention.
• Technology Transfer (also called Transfer of Technology (TOT) and
Technology Commercialization)1 are the processes by which the
information or knowledge related to the technological aspects travel
within the group or between the organizations or entity.
• Taking this to the broader scenario, give rise to International
technology transfer in which the knowledge travels in between the
countries, which is not only limited to the Knowledge and
information, rather includes skill transferring, methods of
manufacturing, physical assets, know-how, and other technical
aspects, and henceforth helps in further development of the
technology and innovation, by effectively utilizing the technology
transferred and finally incorporating it.
• On the other hand licensing is allowance granted by the patent
owner to another person or organization for using the patented
invention on agreed terms and conditions, while the patent owner
continues maintaining his ownership to the patent and hereafter
becomes the source of income by receiving the predetermined
royalties or as per the condition.
• So by combining the concept of the technology transfer with the licensing
one can help in taking the benefit of the technology research that has been
done previously, as licensing creates the permissible structure for the
transfer of the technology to a larger assembly of researchers and
engineers, which will help in saving the expenses of conducting the
research and the costs of maintaining development activities or facilities
and hence will help in the further development of the technology which
has already been done.
• As now a days in the era of the advancement in the technologies there are
many technologies which with the combination with the other
technologies is giving birth to the other new advent technologies. so here
the licensing do play the important role in providing the legal platform to
utilize the combination of the technologies made or discovered by the
other persons or the organization which has been created earlier, and
hereafter prevents from wastage of the time and the research cost
incurred in developing the earlier inventions.
 Technology Transfer : Meaning
• Technology meaning ("science of collection craft", of from
techniques Greek techne, "art, skill, cunning of skills, methods and
processes hand"; and logical) is the collection of techniques, skills,
methods and processes and the like or it can be embedded in
machines which can be operated without detailed knowledge of
their workings.
• Technology can be described in the following ways
• 1. Tangible : blueprints, models, operating manuals, prototypes
• 2. Intangible : consultancy, problem-solving, and training methods.
• 3. High : entirely or almost entirely automated and intelligent
technology that manipulates ever finer matter and ever powerful
forces.
• 4. Intermediate : semi-automated partially intelligent technology
that manipulates refined matter and medium level forces.
• 5. Low : labour-intensive technology that manipulates only coarse
orgross matter and weaker forces.
• Technology means
• 1. the branch of knowledge that deals with the creation and use
of technical means and their interrelation with life, society, and
the environment, drawing upon such subjects as industrial arts,
engineering, applied science, and pure science;
• 2. the application of this knowledge for practical ends;3. the
terminology of an art, science, etc., technical nomenclature;4. a
scientific or industrial process, invention, method, or the like;
FORMS OF TECHNOLOGY TRANSFER:
• Technology transfer can be classified into vertical and horizontal
technology transfer
• Vertical transfer refers to transfer of technology where transmission
of new technologies is done from the generation of new technology
during the research and development programs into the science and
technology organizations, for instance, to the application related to
the industrial and agricultural sectors, or we can say that vertical
transfer is the technology transfer commencing from basic research
to applied research, from applied research to development followed
by development to production.
• While the horizontal technology transfer is the movement of a well-
known technology from one equipped environment to another (from
one company to another) or say refers to the transfer and use of
technology used in one place or organization to another place or
organization.
As discussed above generally developed countries follow the route:-
• Research -> Development -> Design -> Production
• While less advanced and developing countries follow the route:-
• Production -> Design -> Development -> Research
• Generally there are the reverse trends in the developing countries
because the path to be followed depends upon the transfer,
absorption, and adaptation of existing technology
• Today in the era of advent in technology one could choose any of the
routes of the technology transfer which depends upon how the
technology advancement chains of the transferor and transferee are
associated.
Vertical Technology Transfer
• Vertical transfer refers to transfer of technology from basic
research to applied research to development and then to
production respectively.
• It refers to the transfer of technology where transmission of
new technologies is done from the generation of new
technology during the research and development of programs
into the science and organizations, for instance to the
application related to the industrial and agricultural sectors.
Horizontal Technology Transfer
• Horizontal technology transfer is the movement of a well-known
technology from one equipped environment to another or say
refers to the transfer and use of technology used in one place or
organization to another place or organization.
ADVANTAGES RELATED TO TECHNOLOGY TRANSFER:
• The advantages related to technology transfer comprises of the essential
gain to the public who benefits from the manufactured goods that get to
the market and ultimately the availability of the jobs which results from
the improvement and sale of the products so formed.
• And hence it encourages use of technology developed and the benefiting
to the society development which comes from the revenue of the tax
payers.
• And escalating visibility to researchers and allows researcher to generate
and earn royalty income and henceforth attaining financial profits for the
government and the employees from royalty payments for those
technology transfers that involve patent licenses.
• Moreover resulting in commercialization of the researches and the
discoveries made, which was the course of the investment done for the
development and being protected by the patent.
• Hereafter all the Investments done in the course of the development in
intellectual property are returned to the public through products made for
the public, opportunity of more employment, and revenue in the form of
taxes.
• Technology transfer strengthens industry by identifying new business
opportunities which contributes to enhancing the know-how and
competitiveness of the technology providers, which ultimately results
in broadening the business area and re-focusing to the technologies
and systems to serve several different fields. In addition, technology
transfer promotes the wider use and awareness of technology and
systems.
• Technology transfer brings economic benefits by increasing revenues
for both technology donors and receiver's benefits with new and
better products, processes, and services that lead to increased
efficiency and effectiveness, greater market share and increased
profits.
DISADVANTAGES RELATED TO TECHNOLOGY TRANSFER
• As technology transfer is keen or meant for the business oriented
activity, hence forth there can be the chances to have financial or
commercial risk, as we are well aware that Licences can generate the
income, but patent application which are not licensed will only cost
money.
• Even when the transfer programme related to the technology
transfer is successful or in particular after technology transfer
institutional tensions may arise within the organization which may
be in between the recipient of licensing income and those who know
they will never make utilizable inventions.
• For the sake of remedy in those circumstances Institutional policies
can be made aiming to have partial rearrangement of income
received by license between all research groups but, using this
strategy may not eradicate the problem rather in most of the cases
discoverer will be frustrated or disappointed because the income
that they have earned is given to other groups.
• Technology transfer activities may put researchers in conflict of
interest situations, especially when the transfer involves the
creation of the spin- off company, hence Institutions should be
aware of these possible dangers.
• Moreover problem can be because of non performance of licensee.
And may be the licensee has limited chances beyond the license
scope unless future enhancements to patent included in initial
agreement and Unrealistic expectations and demands from licensor.
Main Direct Technology Transfer Agreements
1. The Sale or Assignment of IP Rights
• The first legal method is the sale by the owner of all his or its
exclusive rights to, say , a patented invention and the purchase of
those rights by another person or legal entity.

• When its owner to another person or legal entity transfers all the
exclusive rights to a patented invention, without any restriction in
time or any other condition, it is said that an ‘asssignment’ of such
rights have been taken place.

• Similar principles and characteristics apply to the assignment of

other objects of industrial property, e.g., trademark and industrial
design and copyright also.
2. License Contract
• The second legal method is through license, that is permission by
the owner of a patented invention to another person or legal entity
to perform, in the country and for the duration of the patent rights,
one or more of the ‘acts’ which are covered by the exclusive rights
to the patented invention in that country.
• When that permission is given, a ‘license’ has been granted.
• The license is usually granted subject to certain conditions, which
will be set out in the written document by which the license is
granted to the licensee.
• The licensee will relate one of the conditions to the payment
money or some other consideration in return for the license that is
granted.
• Licensing seems appropriate for the small companies in high
technology sectors as they do not have financial resources to
engage either export or FDI.
• Licensing has distinct advantages as after acquiring the license the
licensee can become one of the powerful competitor after it ends.
3. Know – How Contract
• The third of three principal legal methods for the transfer and acquisition
of technology concerns know-how. It is possible to include provisions
concerning know-how in a document that is separate from a license
contract.
• This contract can be in the tangible as well as intangible form.
• In tangible form, documents, photographs, blueprints, computer cards,
and microfilm among others are transferred.
• Examples of know-how that could be transmitted in such forms are
architectural plans of factory buildings, diagrams of the layout of factory
equipment, blueprints of machines, lists of spare parts, manual
instructions for operating machines, process flow charts, packaging and
storing information.
• Such Know-How in tangible form is sometimes referred as ‘ Technical
Information or Data’
• The intangible form example would be an engineer of the
supplier of the know-how explaining a process to an engineer of
the recipient.
• The possibility that the know-how to be communicated by the
supplier to the recipient might be disclosed, accidentally or
otherwise, to third persons, is a very real concern to the supplier
of know-how.
• The provisions concerning know-how in the contract will thus
cover various measures to safeguard against the disclosure of
the know-how to unauthorised persons.
4. Technology Service Agreement
• Occasionally the agreement includes technical service contracts
relating to either technical or managerial skills or both, the supply of
intermediate inputs and even the supply of machinery.

• This is particularly so in licence agreements contracted with

enterprises in developing countries.

• Charges made for technology supplied under a licence agreement

area referred to as royalties. Payment for technical services provided
are generally referred to as fees.

• These are all rate charges upon either ‘gross’ or ‘net’ sales of the
licensee. Some of the contractual agreements, such as engineering
and construction contracts are paid for lump sum.
5. Machinery Supply
• The supply of goods, especially capital goods such as machinery and
spare parts, has been a traditional way of transferring technology to
developing countries.
• Many types of plant and equipment, hand-tools, transportation and
communication devices and even consumer goods which the
multinational company supplies in developing countries embody
technologies which purchasers learn to use.
• Even simple equipment carries with it the design, composition of
material used to produce it and, to a limited extent the production
method.
• The multinational company finds this method of transfer convenient
and simple. In the first place, the company’s risks are low as the
payment for machinery is guaranteed. Secondly, its involvement in
transmitting the embodied technology is restricted to the manual
instructions accompanying the machinery except where a separate
or an all –embracing contract which includes the provisions of
technical assistance is generally prevalant one.
• Technology import through the purchase of machinery has been
an important source to many developing countries.

• However, this ‘ Direct transfer’ channel is often subject to

restrictions imposed by patent right over the embodied
technology and by governments of purchasing countries.

• In the former case, patented machine will be available for

purchase only if the machine manufacturer holds the patent.

• Therefore the success of this method of transfer depends upon

the availability of other complementary know-how.
6. Franchising
• Franchising is a variation on licensing, which in certain ways is an
improvement on the latter as it involves an ongoing relationship
between franchiser and franchises.
• Where the pure form of licensing involves a one off-sale of
intellectual property rights by the licensor to the licensee and
subsequent loss of control by the former on the quality of goods
produced by the latter under license, franchising may involve many
activities ranging from training to the staff of the franchises to
control over operations engaged in by the latter under the
franchise agreement.
• Franchising like licensing involves payment of royalties over time
including an initial payment .
• Typically franchising may include any of the following:
• Use of technology, design, packaging, brand names, etc.
• Training of the staff and help with the management
• Control of operations of the franchisee by the franchiser and control of
the quality of the product or service.
7. Supply Contract

• According to this agreement, the technology owner participates in the

technology implementation, providing at each stage of the transfer technical
support, as well as personnel training.

• The involvement of technology developer in the technology transfer process

ensures a closer cooperation between two parties which favours a complete
transfer of all knowledge and skills related to the technology.

• In this way, the support contract may be apart of the licensing agreement,
in order to improve the transfer efficiency.
8. Strategic Alliance Agreement
• A strategic alliance agreement is usually concluded between two or more
big companies in order to use specific skills of each of them in the
development of new innovative technologies.
• Strategic alliance could be in form of joint laboratories, research
programs, production and promotion of a new product.
• The major weakness of strategic alliances is the complexity in managing
companies with different cultures. There will be at least two teams of
managers with different approaches. The companies may have different
goals and strategies in further business development of the new
technology.
9. Equipment Acquisition Agreement
• Equipment Acquisition is a simple and therefore, one of the most common
methods of technology transfer. The main disadvantage of this method is
the fact that the company limits itself to mere technical knowledge
incorporated in the equipment and does not get any new competences in
the management and production.
• Moreover, the equipment available on the market does not give unique
privilege to buyer, as this equipment may be purchased by any other
competitor.
 IPR and Technology Transfer
• The TRIPS Agreement aims to achieve the transfer and dissemination
of technology as part of its objectives, and specifically requires
developed country members to provide incentives for their
companies to promote the transfer of technology to least-developed
countries.
INDIAN SCENARIO REGARDING THE LICENSING AND TECHNOLOGY
TRANSFER
• Technology in India is growing exponentially and has played an
important role in all round development and growth of economy in
the country, India has opted for a wise mix of original and imported
technology. Henceforth "Technology transfer" plays a very important
role and is generally covered by a technology transfer agreement.
• Developing countries like India generally not follow the usual path for
development with regard to technologies but use their advantage in
the cutting edge technology options which is now available and put
the tools to use this modern technology.
• Technology transfer is assumed to get benefits from R&D which is
shared with the developing and underdeveloped countries , so taking
this to the point of consideration National research laboratories is
been constructed by the Indian government for the purpose of R&D
which is yet to be commenced by the private sectors.
• India generally comprises of Small and medium enterprises and is
growing since liberalization, which has resulted in growth of The
multinational enterprises, which in turn is competing with the
international companies which has enhanced the confidence of
India. Not only confined to the pharmaceuticals but is broadly
categorized in other areas too such as agriculture, dairy and other
technologies.
• Government of India is in the verge to open Technology Transfer
Offices, Universities, institutions which will be funded by central
government and will acts as mechanism for transferring or
exporting the research conducted and its outcome to the desired
place.