Licensing as a Central Structure of Technology Transfer Agreements – Joint Venture and Franchising Agreements
Authors: Gaitán Manuel Guerrero 
Published: April 2021

R&D is one of the most important sources of knowledge and economic growth worldwide, and technology transfer is the principal means to access this knowledge. Nevertheless, market imperfections, externalities, and abusive behaviors have been used by some jurisdictions to justify the enactment of regulations on different contractual categories frequently used to implement this transfer of technology.

According to the UNCTAD 2001 report, technology transfer agreements encompass an array of agreements differentiated by their subject matter. Such contracts cover, amongst other things, industrial property, know-how, and technology expertise.1

Most of the doctrine considers technology transfer agreements as an autonomous contractual category due to their standard features,2 such as their bilateral character, the reciprocal rights and obligations between the parties, and the presence of intellectual property rights.3 Thus, the agreements that belong to this category are often determined by the existence of intellectual property rights and know-how. These rights mainly protect useful knowledge that can be exploited in the market by its legal owner or the person who is authorized to do so.

The exploitation of intangible assets is carried out using different sorts of contracts, frequently not regulated by law or other statutes and sometimes with a high degree of complexity, depending on the relevant technical matter and the parties’ activities. However, nowadays, despite the lack of specific regulation for most of these types of agreements, they are frequently used in the market and are indeed the licensing agreement that is most used and one of the few that are regulated in some jurisdictions.4

In the same sense, it is essential to highlight the presence of other contracts; for example, it is possible to find features of a trademark license, the sale of products, distribution, or even agency in a franchise agreement. This presence occasionally leads to difficulties in the construction of the parties’ will when there is silence or poor wording on the obligations to be performed.

Concerning the construction of the contract, there are different forms that a technology transfer agreement may assume. In this regard, we must point out that the lack of legal classification5 means that it is necessary to use various sources, such as case law, arbitration awards, decisions of administrative bodies, and of course doctrine to carry out a complete analysis of these contracts.

For the purpose of this study, a technology transfer agreement is to be considered as the transaction that allows a party to access a technology owned by the other party in exchange for consideration.

This article’s main objective is to show how technology transfer occurs through licensing agreements in other complex contracts like joint ventures and franchising agreements. In order to illustrate this transfer of technology, we will throughout this article use statutes and case law of the European Union, the United States, and the Andean Community (CAN).

The aim is to present, initially, the scope of the expression technology transfer; we will then examine how these three legal categories work, the relationship between these complex contracts and licensing, and finally, the importance of using the structure of licensing in joint ventures and franchising agreements adequately.