Technology Contracts and Intellectual Property

One of the functions of the Intellectual Property System is to protect the efforts of companies to differentiate and innovate in their production through the development of new technologies, trademarks, among others. A way to accomplish this prerogative is dictating the institutional foundations of intangible assets’ market, which is one of the means by which there is economic exploitation of intellectual property rights.
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What are intangible assets?

Assets, in a general concept, are “economic goods with the property to maintain or expand wealth, having capacity to produce value for its owners.” Intangible assets are, in turn, according to the World Intellectual Property Organization (WIPO), a set of “immaterial goods (not embodied) that can reap monetary gains to the holder (owner).“. They are, for example, patents, franchises, trademarks, copyrights, secret processes, licenses, developed software and databases that a company has.
Companies that have these intangible assets, such as patents and trademarks, in order to get financial benefits through them, have two alternatives: (i) use them directly, for example, by optimizing production with the application of a technology that they have, or producing an innovative product; or (ii) use them indirectly, by negotiating it through technology contracts.

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Technology Contracts

A Technology Contract, as defined by the Brazilian Institute of Industrial Property (INPI) is the “process by which a body of knowledge, skills and procedures applicable to the problems of production [in the enterprise] are transferred, by an economic transaction, from one organization to another, increasing the innovation capacity of the receiving organization. ” Through this type of contract, companies negotiate the intangible assets that have a potential to generate financial benefits.
Contracts involving industrial property rights, those that have as object the negotiation of patents, trademarks and industrial designs, are divided between the Assignment Contracts and License Agreements.

Assignment Contracts

These contracts are “the instrument by which a patent, an industrial design or a trademark are permanently transferred from one part to another; the assignment agreement amounts to a purchase and sale of movables , when costly, or a donation when free “.
This is the way in which the holder of the industrial property rights relinquishes their ownership for the benefit of the other party of the contract by transferring to it the assignee all rights of use, enjoyment and ownership of that asset.

License Agreement

Licensing Agreements are a means to grant “temporary authorization for use of trademark or patent /industrial exploitation design without the transfer of ownership.”. In this type of contract, the holder of the industrial property rights allows a third party (licensee) to use/exploit his/hers trademark/patent/industrial design by fulfilling the conditions and within the limits established by the parties, in addition to having to pay royalties (cash portion negotiated between the parties).
It notes that the object of these contract arrangements can be both the industrial property rights already granted by the INPI and the expectation of the grant of the right, being possible to transfer and to license trademark applications / patents / industrial designs in analysis situation.
In this context, there are Technology Transfer Agreements, which are those involving intangible assets that are not formally protected by industrial property rights. For example, technologies that do not meet all the requirements for obtaining a registration patent, but are extremely useful for the development of enterprises.
Technology Transfer Agreements cover two categories: (i) Technology Supply Agreements and (ii) Technical Assistance Service Contracts.

Technology Supply Contracts

This type of contract is characterized as a mixed instrument, since it involves the simultaneous purchase, sale and lease of a service. It is used for negotiations involving the supply of “knowledge, information and techniques not supported by industrial property rights, for the production and marketing of industrial goods and services” between the contractors.
This set of information is known more specifically as know-how and is presented generally in the form of available reports, templates, assembly sequences and manuals, etc.

Technical Assistance Service Contracts

In this type of contract, technology transfer occurs through obtaining planning methods, techniques, programs, studies and research, and projects aimed at the implementation/providing specialized services related to equipment purchased through the offering of the service. Especifically, it involves “providing customized solutions to address specific solutions  aimed to solve problems of production or support activities for the implementation of technology.”