FOURTEENTH CONGRESS OF THE REPUBLIC 
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First Regular Session 
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S E N A T E  
S.B.No. 1721 
Introduced by SENATOR EDGARDO J. ANGARA 
EXPLANATORY NOTE 
The weakest link in the country's innovation system is the process of 
transferring and commercializing the results of research and development 
(R&D) particularly 
those 
undertaken by 
government-funded R&D 
institutions. The reasons for this are many. For one, the technology transfer 
process requires a conducive policy environment with strong support from 
public and private sectors. 
In many developed countries, technology transfer and innovation 
policy are very much at the center of their policies on economic development. 
Thus, the strong productivity growth recorded in the United States, Japan, 
European countries and recently India was underpinned by technological 
innovations that emanated from high-quality scientific research institutions. 
Their innovation activities are supported by sufficient investment in research 
and development, highly capacitated research institutions, strong university- 
industry research collaboration, promotion of entrepreneurship and economic 
activities across broad spectrum of society, and well defined intellectual 
property rights regime. 
Comparatively, the Philippines has yet to achieve high level of 
technological readiness and innovative capacity that typify well-developed 
economies and those entering the developed phase like India. The 2006-2007 
Global Competitiveness Report places the Philippines in the 71St ranking out 
of 125 countries in terms of technological readiness or ability to adopt 
technologies from home or abroad to enhance the productivity of its 
industries. This is in contrast with the high rankings of our Asian neighbors 
like Singapore (2nd), Hong Kong (13th), Korea (I@), 
Japan (19th), Malaysia 
(28th) and Thailand (48th). In the area of innovation or the ability to produce 
brand new technologies, the country ranks a dismal 79th. 
Compared to 
emerging innovation powerhouses in the ASEAN like Singapore (st"), 
Malaysia (219, Indonesia (37th) and Thailand (339, the Philippines clearly 
has a lot of catching up to do in terms of innovation. It has to become 
responsive to opportunities of knowledge-based economies characterized by 
growing innovation and heightened dependence on intellectual property 
assets as a key source of economic value and competitive advantage. 
Worldwide, there is a growing recognition of the importance of 
intellectual property (IP) in encouraging innovation, diffusing scientific and 
technical knowledge, and in enhancing market entry and firm creation. The 
experiences of other countries show that in order to enhance the impact of 
publicly-funded R&D on the economy, the protection of intellectual property 
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assets arising from R&D projects funded fully or in part by national 
government agencies have encouraged the commercialization of publicly- 
funded R&D results bringing about significant private and social benefits. IP 
rights, of which patents, industrial designs, copyrights and trademarks are 
among the most widespread, reward investment in R&D and innovation by 
granting inventors and creators market power over competitors. 
In many countries, governments have recognized that placing the 
outputs of publicly funded research in the public domain is not sufficient to 
generate social and economic benefits from R&D. Granting R&D institutions 
the rights to IP generated with public funds can lead to better use of research 
results that might otherwise remain unexploited as well as to the creation of 
academic spin-offs or start-ups that create employment. For R&D 
institutions, the benefits may include increased licensing and royalty 
revenues, more contract research and greater cross-fertilization between 
entrepreneurial faculty and industry. Equally important, however, are the 
intangible benefits to an institution’s reputation and to the quality of its 
research that closer interaction with the private sector can generate. 
The challenge, therefore, is to address the basic weakness in our 
technology transfer process, and to provide the enabling mechanism to 
facilitate the flow of knowledge and technologies to industry, i.e., a coherent 
policy on which to base the negotiation of terms for the transfer of 
technologies between public and private sectors. 
This proposed legislation hopes to presage a stronger and closer 
private-public collaboration or closer relationship to industry; provide the 
framework that will promote coordination, integration and harmonization of 
all technology transfer efforts by various agencies in the country; resolve 
issues on technology ownership, and provide the institutional mechanism for 
developing a creative technology transfer capability. 
It underscores the importance of technology transfer as an engine to 
move the country forward and establishes the scheme that will make possible 
the emergence of the Philippines as another ASEAN innovation powerhouse. 
Endorsed by the Departments of Science and Technology, Agriculture, 
Environment and Natural Resources, Health, Trade and Industry, and 
Interior and Local Governments, Commission on Higher Education, and 
Intellectual Property Philippines, this bill is recommended for immediate 
enactment. 
EDGARDO J. ANGARA 
Senator 
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FOURTEENTH CONGRESS OF THE REPUBLIC 
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7 OCT 11 
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OF THE PHILIPPINES 
First Regular Session 
I 
Introduced by SENATOR EDGARDO J. ANGARA 
AN ACT PROVIDING THE FRAMEWORK AND SUPPORT SYSTEM 
FOR THE OWNERSHIP, MANAGEMENT, USE, AND 
COMMERCIALIZATION OF INTELLECTUAL PROPERTY 
GENERATED FROM RESEARCH AND DEVELOPMENT FUNDED BY 
GOVERNMENT. 
Be enacted by the Senate and the House of Representatives of the 
Philippines in Congress Assembled: 
ARTICLE I 
TITLE, DECLARATION OF POLICY, OBJECTIVES 
AND SCOPE OF PRACTICE 
SECTION 1. Short Title. - This Act shall be known as the 
“Technology Transfer Act of 2007.” 
SECTION 2. Declaration of Policy. The State fully recognizes that 
science and technology are essential for national development and progress. 
It shall, therefore, give priority to research and development, invention, 
innovation, and their utilization. It shall also encourage the widest and 
systematic participation of all stakeholders in policy making related to 
science and technology, and in the generation, transfer and utilization of 
intellectual property. 
To harness the opportunities brought by globalization, the State shall 
facilitate the transfer and promote the utilization of intellectual property 
from all sources for the national benefit. It shall protect and secure the 
exclusive rights of scientists, inventors, and other gifted citizens to their 
intellectual property particularly when beneficial to the people. 
SECTION 3. Objectiue. This Act aims to promote more effective 
use, management, and commercialization of intellectual property resulting 
from research and development funded by government to the benefit of 
national economy and taxpayers and consistent with the needs of government 
to disseminate, diffuse and transfer economically relevant knowledge and 
technologies. 
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SECTION 4. Definition of Terms. For purposes of this Act, 
a) “Intellectual property (IP)” is the term used to describe intangible 
assets resulting from the creative work of an individual or 
organization. 
They form the basis of legal rights as defined in 
Republic Act 8293 (Intellectual Property Code of the Philippines). 
These legal rights provide protection to the creator of the original 
material. They can be traded in the same way as physical assets and 
can be extremely valuable. 
b) “Intellectual Property Rights (IPR)” refer to the entitlement and 
enjoyment of the attributes of ownership over intellectual properties 
as defined by law. 
c) ‘%ouernment Funding Agency (GFA)” refers to any executive 
agency 
that 
provides 
research 
grants 
from 
government 
appropriations including government-managed Official Development 
Assistance (ODA) funds. 
d) “Research and development institute (RDI)” refers to a public or 
private Filipino organization, association, partnership, joint venture, 
or a corporation that performs research funded by GFAs. 
e) “Research Funding Agreement” refers to a contract entered into 
by and among the GFA, RDI, and researcher. It governs ownership of 
IP, duties of GFAs and RDIs, technology disclosure, exclusivity of 
the license, use for commercialization, establishment of spin-off 
firms, technologies for research use, and sharing of income and 
benefits from technology commercialization. 
f) “Spin off firm” refers to an independent business technology taker 
created through the initiative of the researcher-employee who 
generated the technology. 
g) “Technology” refers to knowledge and know-how, skills, products, 
processes, and/or practices. 
h) “Technology transfer” refers to the process by which one party 
gains access to technology of another party, and successfully learns it 
and applies it for productive ends. 
SECTION 5. Scope of Practice. This Act shall cover the following: 
a) All R&D activities carried out by research and development 
institutions on behalf of the Philippine Government; 
b) All intellectual properties derived from R&D activities funded by 
government that have commercial potential; 
c) All government agencies that fund R&D activities; and 
d) All R&D institutions including higher education institutions that 
implement government funded R&D. 
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ARTICLE I1 
INTELLECTUAL PROPERTY OWNERSHIP 
SECTION 6. Ownership of Intellectual Property generated from 
research funded by GFA shall, in general, be vested in the RDI that actually 
performed the research, unless there are valid and compelling reasons to the 
contrary (as may be defined in Chapter X, Part 1 of FL4 8293- Intellectual 
Property Code, and the mandated functions of the GFA). This is in 
recognition of the fact that RDIs are in a better position to identify the 
potential for economic utilization of intellectual property, subject to their 
having the right skills and management capability. 
It should also be recognized that the GFAs need not own the IP 
generated in the research they fund to be able to use it for Government 
purposes. The RDI owning the IP can license it for the use of the GFA. 
In case of joint funding, the RDIs shall own the IPS but R&D funding 
agreements should consider the policies of contracting parties whether local 
private or international parties. 
ARTICLE I11 
BIGHTS AND RESPONSIBILITIES 
SECTION 7. 
Rights and Responsibilities of 
Government 
Funding Agency. Under this Act the GFA shall: 
a) protect government interest in the IP generated from the R&D that it 
funded through suitable provisions in the R&D funding agreement; 
b) monitor efforts and effectiveness of the RDI in securing IP protection 
and pursuing IP commercialization, as well as provide alternative 
solutions in case of shortfall in RDI's performance in utilizing and 
commercializing the IP; 
c) ensure adequate freedom to use the IP for its policy and business 
needs including its use for further research to expand the knowledge 
frontier, and requirements for publication of information as 
appropriate in accordance with government policy; and 
d) allow sharing of revenues from IP commercialization in a way that is 
not onerous to discourage commercialization. 
SECTION 8. Rights and Responsibilities of the Research and 
The following are the rights and responsibilities 
Development Institutes. 
of the RDIs that availed of research funds from GFAs: 
a) identify, protect, and manage the IP generated from R&D funded by 
GFA and pursue commercial exploitation diligently as a required 
performance stipulated in the R&D funding agreement; 
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b) provide a means for addressing any shortfall of its performance in 
utilizing and commercializing the IP; 
c) notify GFA of all patent applications and assignments made; 
d) report to GFA progress of IP commercialization efforts and of all 
licenses granted; 
e) keep account of revenues and payments to the GFA if revenue 
sharing is provided in the R&D funding agreement; 
fJ 
ensure that they have access to the skills and management capability 
to effectively perform their responsibilities of owning, managing, and 
exploiting the IP. Smaller RDIs that may need external advice are 
encouraged to pool and share resources; and 
g) accord their staff with incentives consistent with existing laws to 
sustain efforts in identifying valuable IP and in pursuing IP 
commercialization. 
ARTICLE 1V 
MANAGEMENT OF IPS FROM R&D PERFORMED 
BY GOVERNMENT RDIs THROUGH THEIR OWN BUDGET 
SECTION 9. Responsibilities of RDI Performing R&D with their 
Own Budget. All government RDIs performing R&D through annual budget 
provided by the government shall submit intellectual property management 
report to the national government agencies that they are attached to. The 
report shall contain plans for securing protection on IPS with commercial 
promise, the technology transfer approaches to be pursued, and the progress 
of on going commercialization of technologies derived from R&D funded from 
their own budget 
SECTION 10. Responsibilities of the Concerned National 
Government Agencies. Concerned government agencies shall monitor 
efforts and effectiveness of their RDIs in securing IP protection and pursuing 
IP commercialization, based on the annual statement of plans and actions of 
managing the IPS submitted by the RDIs. 
ARTICLE V 
REVENUE SHARING 
SECTION 
11. Reuenue 
Sharing. All 
revenues 
from 
the 
commercialization of IPS from R&D funded by GFA shall accrue to the RDI, 
unless there is a revenue sharing provision in the R&D funding agreement. 
In all cases, GFA and RDI shall negotiate whether a revenue sharing scheme 
will be included as entitlement clauses in the R&D funding agreement. 
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Sharing of revenues between RDI and researcher shall be governed by 
an employer-employee contract. 
ARTICLE VI 
ESTABLISHMENT OF SPIN-OFF FIRMS 
SECTION 12. Commercialization by ResearcherdTechnology 
Generators. On meritorious cases, an RDI shall allow its researcher- 
employee to commercialize the IP generated from R&D funded by GFA 
through the creation of a spin-off firm provided that its researcher- employee 
takes a leave of absence for a period not exceeding two years. 
The RDIs shall properly manage any possible conflict of interest by 
issuinghstablishing appropriate guidelines for its researcher/employee. 
Mechanisms for handling conflicts are the following: 
a) RDIs shall ensure that its staff are made fully accountable for their 
researches and that commercial objectives do not divert the staff 
from carrying out the RDI's core research program; 
b) Heads of RDI should ensure that where a member of the staff has a 
financial interest in a spin-off company (e.g. shareholding, personal 
directorship, or consultancy agreement), this individual should not 
also act as an RDI contact with that company on day-to-day matters; 
c) Where staffs are nominated as non-executive directors to the board of 
a spin-off company in which the RDI or its sponsor holds an equity 
stake, they should have a clear duty to ensure that the RDI's 
interests are not compromised by their role; and 
d) RDIs should take steps to ensure that collaborative undertaking with 
a spin-off company is governed by a formal agreement. 
ARTICLE VI1 
COMPULSORY LICENSING 
SECTION 13. Applicability of Compulsory Licensing. This law 
shall adopt the grounds, terms and conditions of Chapter X (Compulsory 
Licensing) Part I of RA 8293, Intellectual Property Code of the Philippines on 
the granting of license to exploit a protected IP, even without the agreement 
of the IP owner, in favor of any person who has shown his capability to 
exploit the IP. 


ARTICLE VI11 
USE OF INCOME FROM COMMERCIALIZATION OF IP ASSETS 
SECTION 14. Use of Income - Public RDIs undertaking technology 
transfer shall be vested with the authority to use the income derived from 
commercialization of IP generated from R&D funded by GFAs. Income from 
commercialization shall be used to compensate the researcher-employee; and 
to fund R&D, S&T capability building, and technology transfer activities 
including the establishment and management of technology licensing offices. 
All income from IP commercialization shall be deposited in a revolving 
fund established by the RDI and shall be exempted from the duty of 
remitting such income to the Bureau of Treasury. The revolving fund shall 
be subjected to regular auditing of the Commission on Audit. 
ARTICLE M 
INSTITUTIONAL MECHANISM 
SECTION 16. Establishment of Technology Information Access 
Facility. The Department of Science and Technology (DOST) shall establish 
a common access facility for all technologies generated from R&D funded by 
GFAs and those generated by RDIs through their own budget. All RDIs shall 
contribute to this Technology Information Access Facility. 
SECTION 16. Development of Internal ZP 
Policies and 
Establishment of technology 
licensing 
offices (TLOs) and/or 
technology business ' development offices - All public RDIs with 
substantial R&D capacity involved in technology transfer activities are 
encouraged to establish their own TLOs in whatever form they may deem 
appropriate and develop their own IP policies in accordancehn support with 
the policies of the Intellectual Property Philippines. 
ARTICLE X 
MISCELLANEOUS, TRANSITORY, AND FINAL PROVISIONS 
SECTION 17. Funding. The activities and operational expenses 
related to the implementation of this Act shall be funded from the budget 
appropriations of GFAs and RDIs. 
SECTION 18. Periodic review. Every three (3) years from the 
effectivity of this Act, an independent review panel to be appointed by the 
President shall review the policies and programs on technology transfer 
under this Act and shall recommend appropriate measures to the President 
and to both Houses of Congress. 
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SECTION 19. Implementing Rules and Regulations. 
The 
Department of Science and Technology, in collaboration with Intellectual 
Property Philippines, shall lead GFAs in formulating the IRR for the effective 
implementation of this Act. The DOST Secretary shall chair the drafting 
committee. The IRR shall be issued within 90 days after the effectivity of this 
Act. Copies of the IRR shall be submitted to the committees on Science and 
Technology of both Houses of Congress within (30) days after its 
promulgation, as well as to other appropriate agencies as may be required by 
law. 
SECTION 20. Repealing Clause. All laws, presidential decrees, 
executive orders, presidential proclamations, rules and regulations or part 
thereof which may be contrary to or inconsistent with this Act are hereby 
repealed or modified accordingly. 
SECTION 21. Separability Clause. If any provision of this Act is 
declared unconstitutional, the same shall not affect the validity and 
effectivity of the other provisions hereof. 
SECTION 22. Effectivity. This Act shall take effect fifteen (15) days 
after its complete publication in two (2) newspapers of general circulation. 
Approved, 
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