Technology transfer

Technology transfer occurs when the developer or owner of certain technology shares that technology with organizations or individuals who wish to have access to it. The technology may be in the form of a PRODUCT, a PRODUCTION process, a design, information, KNOW-HOW, or some combination of these. Technology transfers may occur between parties in different nations. Often companies or individuals in developed nations are the owners of technology, and they may have nationally and internationally recognized proprietary rights in what they own or have developed. Parties in EMERGING MARKETS may be interested in acquiring that technology, and owners may choose from a variety of options to bring about the technology transfer. One way for technology owners to share their technology is through a license or franchise agreement, whereby the owner receives fees from licensees or royalties from franchisees as compensation for the use of the technology. Owners who wish to establish a more substantial presence in another nation or market may engage in direct FOREIGN INVESTMENT in that nation by forming JOINT VENTURES with local companies or individuals or forming subsidiaries in foreign nations. The owner would share the technology with the joint venture or with its foreign subsidiary and could be compensated in a variety of ways, including PROFITs from sales. Nations may have laws that protect the proprietary interest of owners of various types of technology, such as PATENT, COPYRIGHT, and TRADEMARK laws. Some protection, such as that for patents, may only protect the owner in the nation in which they have been granted the patent. Thus, an inventor of U.S.-patented technology may need to apply for a patent in every nation in which he or she seeks protection against the unauthorized use of his technology. However, some nations refuse to grant patents for certain technology. For example, some less-developed nations do not grant patents for pharmaceuticals, which has led to the production of generic pharmaceuticals based on technology developed elsewhere, but without any compensation to the technology’s developer or owner. U.S. businesses that are considering technology transfer to parties outside in other countries should consider the laws of the nation to which they are transferring technology and obtain protection from the unauthorized use of their technology in those nations whenever possible. U.S. businesses should also consider various international agreements and treaties to assess whether their technology may be internationally protected from unauthorized use. However, some of the principles of international agreements or treaties may not override domestic laws. Some important international agreement and treaties are the General Agreement on Tariffs and Trade (GATT, 1947), the agreement on Trade-Related Intellectual Property Rights (TRIPS, 1994), the Paris Convention, the Patent Cooperation Treaty, and the 1957 Arrangement of Nice Concerning the International Classification of Goods and Services.
See also FRANCHISING; LICENSING.