Technology Transfer (TT), also called Transfer of Technology (TOT) refers to handing over or transferring a technology, knowhow, methodologies, processes, confidential information, trade secrets by the Technology Developer (TD) to the Technology Buyer (TB) and this transfer is completed by execution and signing of a Technology Transfer Agreement, very similar to the way sale deed is signed at the time of buying/selling of the house when ownership is transferred from seller to buyer of a house. The agreement, generally called as Technology Transfer Agreement has all terms and conditions agreed between the parties to complete the process of Technology Transfer. However, Technology Transfer is very sensitive in nature and is prone to getting exploited easily due to intangible nature of the technology. Therefore, lots of precautions need to be taken while entering into Technology Transfer arrangement.
Why to transfer a technology?
To develop a new technology/product, there is huge investment involved in terms of time, money and resources. After technology is developed, scaling up the technology to industrial level and bringing it to the market could be very challenging for the Technology Developer. On top of it, if Technology Developer doesn’t have clue about how to sell the technology, he may be wasting a lot of time without any substantial gain.
It is moment of great joy for the Technology Developer to see his technology working well at industrial level and reaching consumer effectively. In order to commercialize technology, usually Technology Developer, being scientist or researcher, does not have expertise, resources and bandwidth to manufacture, market and sell the technology on his own. Therefore, it makes a lot of sense for the Technology Developer to transfer technology to the suitable company that is already into manufacturing similar product (s) and has well established systems to manufacture, market and sell the product in given territory or the country.
If executed well, usually Technology Transfer is beneficial to both developer and buyer. On one hand, Technology Developer gets opportunity to join hands with the buyer and commercialize technology and on the other hand, the Technology Buyer gets opportunity to new technology which may add lots of value to his business.
Modes of transfer
as generally happens by means of licensing, assignment or joint venture. In licensing the Technology Developer permits the buyer to use technology for a specific period of time without transferring the ownership whereas in case of assignment, the Technology Developer transfers technology to the buyer permanently and in this process, ownership is also transferred. In joint venture, both developer and buyer come together, join hands and establish business jointly. Depending upon the preferences of the parties, the suitable mode of Technology Transfer may be worked out.
Further, the technology can be licensed in exclusive or non-exclusive manner. In case of exclusive license the Technology Developer (licensor) agrees not to grant license to any other company whereas in case of non-exclusive license, Technology Developer can grant license to more than one companies.
Steps to transfer a technology
Once technology is developed, the steps to be followed to transfer technology are as below:
- Detailed documentation of technology to be transferred is very critical. If there is a possibility to register technology as copyright, patent or design, it should be done by the Technology Developer before Technology Transfer process is initiated. Novelty in the technology, problem statement, working of the technology, prototype details, feasibility studies shall be documented in detail. Specific emphasis shall be given to the extent of know-how, confidential information that developer discloses to the buyer because once this information is disclosed to the buyer, there is no way to recover it back. For this reason, it will be wise for the developer to register intellectual property wherever possible so that disclosure of technology becomes easier and safer.
- It is advisable to make a BEDP (Basic Engineering Design Package) for the technology that is being transferred. This helps the Industry to simulate the manufacturing process of the technology and scale up the technology.
- Technology Developer shall have idea about value of the technology. Initially relying on secondary market research data related to market need/size/preferences and applying right techniques, value of the technology shall be estimated.
- At least 50-60 potential companies which may buy the technology shall be listed out and further contact details of top officials in the company shall be extracted.
- Such companies shall be contacted, and positive leads shall be separated out for further follow up. Discussions with such companies may be initiated to finalize the deal. Usually lots of communications and negotiations happen at this stage.
- Execution of the agreement is the final step where all terms and conditions agreed between the developer and buyer are converted to the agreement.
Precautions before entering into Technology Transfer agreement
After discussions and negotiations on terms and conditions, the parties enter into Technology Transfer agreement. For Technology Developers, precautions to be taken before signing the agreement are as below:
- Technology Developer shall be clear about the kind of rights he is granting to the buyer and the jurisdictions to which such rights extend to.
- Value of technology that Technology Developers is getting, and royalty/payment terms/applicable taxes shall be made clear.
- Most of the times, Technology Developer is required to provide initial assistance to the buyer in terms of meetings or trainings the teams. In such a case, Technology Developers shall ensure that he is being paid for such trainings and his travel is also taken care of.
- Term of the agreement, ways of terminating the agreement and effect of termination of the agreement shall be checked properly. Exit from the Agreement shall be smooth for both parties.
- Other than this clauses on indemnity, Governing law, dispute resolution may be looked into thoroughly.
For Technology Buyer, following precautions are needed to be taken:
- Check status of IP filed or granted in the name of the Technology Developer. If patent forms substantial part of the Technology Transfer agreement, it is required to get validation search done to check strength of the patent. Legal status, term of the patent and countries in which patent is filed/granted is also needed to be checked thoroughly. As a part of Technology Transfer, if Technology Developer is going to assign patent to the buyer, it is imperative to make note of prosecution details of the patent, especially renewal fee payable annually in different countries because if such IP is going to be assigned to the buyer, all liabilities and future fee payments also become responsibility of the buyer.
- Scope of rights granted to the buyer shall be such that it should enable buyer to sell the end product smoothly without any hinderance.
- Freedom to operate analysis shall be performed by the buyer to see if product made using the technology of the developer is safe to be launched in a given jurisdiction or not.
- Invention of the Technology Developer may work well in the laboratory but in order to bring product in the market, scalability of the technology shall be checked. It is better to obtain prototype or feasibility studies data from the Technology Developer.
Case study: Jasmine Exporters in Tamil Nadu
Tamil Nadu is the leading producer of jasmine in India and the flowers produced in the state are being exported to various countries like Singapore, Malaysia, Sri Lanka & United States etc and due to long travel time, the flowers would get spoilt and lose fragrance. More precisely the post-harvest losses were 35-40% and this was causing a huge loss to the flower growers.
There was attempt made to solve this problem by working on the better packaging technology. The Indian Council of Agricultural Research (ICAR) along with National Agricultural Innovation Project (NAIP) sponsored project ‘Value Chain on Flowers for Domestic and Export Markets’ in collaboration with M/S. Vanguard Exports, a private successful flower exporter, developed a reliable export packaging technology that would cater to the near and far overseas markets.
R&D of the project was undertaken by Tamil Nadu Agricultural University (TNAU). The technology was disseminated to jasmine growers and entrepreneurs through training programmers and demonstrations. A total of 1280 Growers and entrepreneurs were trained through 26 training Programs in Jasmine growing area of Tamil Nadu.
The technology primarily involved treatment of flower bud strings with boric acid, followed by packing in ventilated corrugated fibre board (CFB) boxes with butter paper lining and the ventilation is made by making holes in the corrugated fiber boxes. After proper packaging the boxes are airlifted to respective destination. The packing in case of longer travel further involved packing of boric acid treated flower bud strings in aluminium foil lined light weight cardboard boxes. These boxes in turn are packaged in large thermocole boxes with intermittent ice gel packs to maintain the temperature and humidity inside the box. These thermocole boxes are transported in refrigerated vans to airport and then it is dispatched to the respective destination.
With this packaging technology, shelf life of flowers increased to 72 hours against 36 hours in normal packaging system and post-harvest losses were reduced from 40% to 10% and the export volume increased to 1000 kg/ day in 2013 (100%) from 500 kg/day in 2008. Before NAIP intervention, the net profit gained was only Rs. 9,250/day, and after the intervention it increased to Rs. 17,500/day. For Dubai market, the export volume increased to 900 kg/ day (2013) from 600kg/day (2008) and the net profit hiked from Rs.2,250/day (2008) to Rs.9,250/day (2013). Tamil Nadu Flower Growers’ Association, Sathyamangalam (3000 growers) was linked directly with jasmine exporters for marketing. Patent for the packaging technology was filed in the name of TNAU (1370/CHE/2010).
Technology Transfer is a very effective way to commercialize a new technology If worked out well, both Technology Developer and buyer can be benefitted by this arrangement. However, both parties shall be aware of terms and conditions they are agreeing upon to make this arrangement win-win for both.
References:
- https://tnau.ac.in/research/wp-content/uploads/sites/60/2020/02/Annexure-7-Jasmine-Packaging.pdf
- https://agritech.tnau.ac.in/export_import/jasmine/index.html
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