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The Risks of Technology Transfer- A Simple Overview

Technology transfer, also known as transfer of technologies, is a process in which one company transfers its technological know-how or technology to another organization. This may take place through the exchange of patents, trademarks, and designs, or may even be purely intellectual property transfer (IPT) with no physical transfer taking place.

Technology transfer
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Technology Transfer between Companies

As such, the terms of this type of exchange are subject to a number of regulations set forth by the government in which the parties to the transfer reside.

There are many different ways in which a company can transfer their technology. Some may simply transfer their technology to a third party without any need for a license, while other companies will acquire a license for their technology when they are able to afford the license fee.

Payment Agreement in Technology Transfer

  • The amount of license required, whether or not the transferred technology is patentable, and what rights the transferor has over the technology are some of the factors that influence how much money the company pays for its technology.
  • In addition to paying for technology licenses when they are acquired, companies are sometimes required to pay licensing fees every time they transfer technology.
  • Licensing costs for technology transfer are often much lower than the cost of patenting a new invention, but this cost is still passed along to the end user.
  • When you license a technology to another company, the company obtains all of the rights to the technology including, but not limited to, the right to use the invention in commerce and the right to protect it in case it is used to commit patent fraud.

Forms of Licensing Technology

There are a variety of different forms of licensing technology. Some types of licensing agreements may only require the recipient to pay for the cost of the license, while others may require both parties to pay the total cost of the license.

Often times, licensing agreements will only require a one-time fee for the entire amount of the license period. Sometimes, however, these agreements may require the transferor to pay for the cost of an annual license as well.

Is Flexibility Required?

When a company is licensing technology, it is usually possible to purchase the technology in advance of the agreement being entered into. This allows for a greater amount of flexibility in terms of the transfer of the technology between the two parties.

A company that already possesses a specific technology may be able to purchase additional copies of it for an agreement price, and then resell them to other companies who need to use the technology.

Sharing of Technology

  • Many companies that have technology that they wish to share with others choose to obtain a license to the technology from a third party. The cost of obtaining a license for the technology will vary based on the amount of time and research that it would take to come up with patentable ideas.
  • For the transfer, and the amount of money and effort involved in the research. A company may not be able to obtain a license for an invention that they already possess if the inventor is unwilling to give up his or her patent rights.
  • In addition to obtaining a license to a technology, a company may also be required to grant the inventor the right to the transfer of ownership of their inventions, the ability to sue, or other related rights.
  • These rights may be granted through exclusive licenses, non-exclusive licenses, or both. In most cases, these rights are limited to specific applications, but the company will have the right to license these rights to multiple parties at once.


Although the government sets a number of rules and regulations that govern technology transfer, many businesses are able to get away with using these practices since the laws regarding technology transfer are not set in stone.

For example, some companies that own the technology and wish to share it do not have to seek formal licenses or be licensed at all, as long as they adhere to the letter of the law. Others may have to pay for patents before they can legally give the technology away.

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