5 MAY -3 P2 59 
mw: 
!, 
SENATE 
1981 
S. No. 
INTRODUCED BY HON. MANUEL B. VILLAR, JR. 
EXPLANATORY NOTE 
The protection given by the Intellectual Property Code of the 
Philippines to technology transfer arrangements refer only to contracts or 
agreements involving the transfer of systematic knowledge for the 
manufacture of a product and excludes operation or distribution of a 
product or technology. 
The inclusion of the phrase “operation or 
distribution of a product or technology” in the 
definition of “technology 
transfer agreements” is intended to place within the ambit of technology 
transfer agreements contracts that are not only for the manufacture of a 
product but also those for the operation or distribution of a product or 
technology where transfer of know-how (or systematic knowledge) is 
likewise involved. 
The purpose of the proposed amendment is to protect local 
enterprises from restrictions imposed by foreign owner of technologies or 
manufacturer of products. It is a fact that local enterprises are usually 
at the receiving end in technology transfer agreements and this situation 
is not likely to change in the near future. There is thus a need to protect 
local enterprises including distributors falling within the scope of the 
definition of technology transfer agreements. 
Protection is achieved, 
among others, by subjecting such agreements to the Prohibited Clauses 
under Section 87 of the Intellectual Property Code as these causes are 
deemed prima facie to have an adverse effect on competition and trade. 
It is intended that the proposed amendments will benefit end-users 
of the product or technology the most. By prohibiting owners of the 
product or technology from restricting the source of raw materials and 
consumables, among others, local operators and distributors are more 
likely to be able to bring down the prices of the finished products thereby 
benefiting the end-users. 
The additional prohibited clause proscribing exemption of licensor, 
manufacturer or owner of technology from granting terms at least equal 
to those granted to other licensees or distributors is intended to protect 
licensees under a non-exclusive licensing agreement from discriminatory 
practices by the licensor or owners of products and technologies. 
In light of the foregoing considerations, approval of this measure is 
earnestly recommended. 


AN ACT EXPANDING THE SCOPE OF PROTECTION FOR 
TECHNOLOGY TRANSFER AGREEMENTS TO INCLUDE OPERATING 
AND DISTRIBUTION AGREEMENTS AMENDING FOR THAT PURPOSE 
SECTIONS 4,85 AND 87 OF REPUBLIC ACT NO. 8293 OTHERWISE 
KNOWN AS THE INTELLECTUAL PROPERTY CODE OF THE 
PHILIPPINES, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the 
Philippines in Congress assembled: 
- 
SECTION 1. Section 4 under Part I, and Sections 85 and87 under 
Chapter IX, Part I1 of R.A. No. 8293 are hereby amended to read as 
follows: 
Section 4. Definitions. - 4.1 The term "intellectual property" 
consists of 
xxx 
4.2 
The term "technology transfer arrangements" refers to 
contracts or agreements involving the transfer of systematic 
knowledge for the manufacture, operation or distribution of 'a 
product or technology, the application of a process, or rendering 
of a service including management contracts; and the transfer, 
assignment or licensing of all forms of intellectual property rights, 
including licensing of computer software except computer software 
developed for mass market. 
Chapter IX 
Voluntary Licensing 
Section 85. Voluntary License Contract - To encourage the 
transfer, dissemination and licensing of intellectual property 
rights and technology, prevent or control practices and conditions 
that may in particular cases constitute an abuse of intellectual 
property rights having an adverse effect on competition and trade, 
all intellectual property licensing arrangements shall comply 
with the provisions of this Chapter. 


xxx 
Section 87. Prohibited Clauses - Except in cases under Section 91, 
the following provisions shall be deemed prima facie to have an 
adverse effect on competition and trade. 
87.1 Those which impose upon a licensee or distributor the 
obligation to acquire from a specific source capital goods, 
intermediate products, raw materials, consumables, and other 
technologies, or of permanently employing personnel indicated by 
the licensor. 
87.15 In case of non-exclusive technology transfer agreements, 
those which exempt the licensor, manufacturer or owner of the 
technology from the obligation to grant to the licensee or 
distributor terms at least equal to those granted by the 
licensor, manufacturer or owner of technology to other 
licensees or distributors. 
SECTION 2. Implementing Rules and Regulations. - The 
Intellectual Property Office may issue Regulations prescribing details for 
the implementation of this law. 
SECTION 3. 
Repealing Clause. - All acts and parts of acts 
inconsistent herewith are hereby repealed or amended accordingly. 
SECTION 4. Separability Clause. - If any provision of this Act or 
the application of such provision to any circumstance is held invalid, the 
remainder of this Act shall not be affected thereby. 
I 
SECTION 5. Effectivity. - This Act shall take effect fifteen (15) days 
after its publication in two (2) newspapers of general circulation. 
Approved,