This article has been written by Smitanshu Choudhary, pursuing the Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho.
Technology transfer, also called transfer of technology (TOT), is the process of disseminating technology from one person or organisation to another. These transfers may occur between educational institutions, research institutes, businesses (ranging between the sizes of a small business to a large one), multinational corporations, and governments across geographical barriers and geopolitical borders. Such dissemination of technology can happen in either a formal manner or informal manner or in an open transaction or closed transaction. Often such transfers occur in instances of efforts to share skills, technologies, knowledge, manufacturing processes, et cetera. Technology transfer ensures that new scientific and technological developments are easily accessible by a broader range of users, who can then exploit the said developments and, thereby, turning them into new products, applications, processes, et cetera. Now that we have got an idea of what technology transfer refers to, in the brief write-up that follows, we will be looking into the importance of technology transfer, how the regime of intellectual property rights facilitates technology transfer and the Indian scenario of technology transfer.
Importance of technology transfer
As opposed to the popular belief, the mere publication of research does not guarantee the research garnering attention leading to someone noticing the discovery and further working upon it, leading to the development of a tangible product for mass utility. Discoveries need to be further developed in order for them to be turned into tangible products; this is achieved through collaborations with different people or organisations.
Technology transfer facilitates the process of technological development of the early-stage intellectual property into tangible goods or tools for practical usage by the masses. Successful partnerships are created between researchers from several academic institutions or companies to enhance knowledge in a specific sector or to develop the technology further. These partnerships might lead to licensing or funded research possibilities for both parties. Furthermore, technology transfer ensures that the university’s intellectual property interests and rights are preserved. The university has the ability to keep the technology’s intellectual property rights and offer a license for conditional usage of the technology.
Research institutions and their commercial partners benefit from successful technology transfers as they result in the further development of technologies. The research institution gains recognition for its innovation potential and improves its reputation. Whereas, on the other hand, licensing technology from a university helps the industry partners cut expenses throughout the research and development process.
The advances in technology aid in the growth of the local economy. The public is the ultimate beneficiary of such advancements. They are the ones who benefit from both – the items that reach the market and the jobs that follow from product research, manufacture, and sale due to technology transfer.
Importance of technology transfer for developing countries
As a source of new product knowledge, many developing countries rely heavily on technology from other countries. The necessity to obtain technology from foreign markets emerges as a result of a shortage of resources. Developing nations have sought both national legislation and international agreements to encourage international technology transfer. In addition, a lack of technological development might keep a country from progressing in the global arena. The most significant advantage of technology transfer is an increase in a country’s national revenue. The relocation of Panasonic’s microwave manufacturing base from the United States to China, which increased employment in the nation and provided mass-manufacturing benefits to the United States, is an example of developing-country technology transfer. India – Samsung example. As a result, technology transfer is critical for developing nations, as it promotes economic progress and goodwill.
How does technology transfer occur?
Technology transfer usually occurs through a license agreement in which the university/research institution retains the ownership of the intellectual property in question, while the other person or organisation to whom the property is transferred gains the right to develop a technology. Before the technology transfer occurs, inventors must describe and shed light upon the nature of their invention research institutions technology transfer office.
Technology licensing experts assess discoveries to identify the technology’s intellectual property standing and prospective market. If there is no intellectual property available, no value to the industry, or adequate market competitiveness, the technology transfer office will be unable to proceed with the innovation. On the other hand, inventions with acceptable intellectual property and market position are given the go-ahead, and intellectual property rights are sought after. Once the intellectual property rights have been secured, innovation management and monetisation plans are adopted.
How does IPR facilitate technology transfer?
Owing to the increase in competition among different sectors, technology has emerged as one of the forces spearheading the factors enabling the development of corporate entities and research institutions. Innovations in technology are playing an active role in shaping the global economic landscape. In today’s digital area, technologies have become more and more valuable, thus, becoming more likely to be targeted by infringers, thereby reducing the inventor’s incentive for the technology in question and future endeavors. Moreover, the infringers would be able to achieve the results at a lower price, thus, putting them in a better position than the innovator. Such infringements are when the regime of IPR comes in and restricts access to innovators’ technology.
IPR protection that is appropriate and effective aids developing nations in their economic growth and technology transfer, gaining rewards for innovation and delivering returns on research & development investments. In contrast, insufficient IPR protection leads to spillovers of sensitive data by domestic firms, whereas excessive IPR protection leads to insufficient knowledge diffusion and hinders innovation growth. As a result, the choice of IPR is contingent on the country’s long-term innovation development and capabilities. In developed countries with prospective inventors, strong IPR protection prevails, allowing them to participate in innovative activities and therefore enhance economic growth. For rapid information dissemination as a source of technological growth, developing nations should accept insufficient IPR protection. Greater IPR protection may encourage developing nations to depend on indigenous businesses that specialise in counterfeiting and copying while rewarding inventiveness in developed countries.
The practice of technology transfer relates to voluntary or non-market transactions, as a result of which an organisation or a person gains access to technology developed in a different country. Therefore, policies made to develop an appropriate and effective IPR regime helps developing countries access foreign technology. Now, let us look into the inter-relation between IPR and International trade, as well as IPR and FDI, and how they impact technology transfer.
Intellectual property and international trade
International trade acts as a crucial channel for the diffusion of technology. The patent strength and its effectiveness determine the pricing of traded technologies, as stronger patent strength creates a competitive advantage for distribution and sale services. Organisations encourage transferring technologies to countries with stronger IPR regimes as such regimes ensure profitability. It also increases market power, thereby decreasing competition. However, a weaker IPR regime does not stop the process of technology transfer completely as high-tech products are difficult to imitate; thus, they are transferred quickly. However, a robust IPR regime does ensure the transferability of high-tech, as well as low-tech products, from which the benefit of the masses can be ensured to the best possible level.
IPR and FDI
FDI is a crucial source for the diffusion of technology resulting in technology transfer across borders or even when it is limited to the host country. However, it can also lead to spillover benefits for domestic firms. Due to FDI, domestic firms may find it easier to imitate the product via a reverse engineering. Because of the high expense of licensing, companies with complex technology and unique products choose FDI over licensing. Stronger IPR protection reduces the danger of technology spillover and increases technology licensing and joint ventures, whereas weaker IPR protection may deter FDI and negatively impact the country’s investment climate. For countries with absorptive capacity, FDI is seen to be effective. Aside from that, foreign inflows are higher in nations with stronger intellectual property protection since certain businesses require patenting at various phases of production.
Technology transfer : the Indian scenario
Section 83 (c) of the Indian Patents Act, 1970 states that “protection and enforcement of patent rights contribute to the promotion of technological innovation and the transfer and dissemination of technology”. In recent years, advancements in technologies have resulted in substantive changes in the patent regime of India, which has thereby impacted numerous businesses and organisations in India that rely on patents to protect their technological advancements and innovations.
To support technological advancement in India, the Indian government has also taken quite a few initiatives in the form of national and state-level schemes, policies, regulations, or by amending pre-existing acts and rules. These include:
- Declaration of 2010 to 2020 as the “Decade of Innovation”;
- Adoption of initiatives such as Make in India;
- Enactment of the 2016 Patent (Amendment) Rules and the 2017 Patent (Amendment) Rules;
- Modernisation of IP offices;
- Appointment of new patent examiners and so on.
These initiatives aim to facilitate and support the research and development processes for research institutions or corporate entities. As seen from the above discourse, there exists a strong relationship between the IPR regime of a country and its innovation, technology transfer, and growth, and the Indian government’s steps to facilitate the research & development processes shows that technology transfer is necessary for the economic growth of a developing country.
Technology transfer is the process of disseminating technology from the owner of IPR to another. Technology transfer helps in the development of tangible products from mere early-stage IPR developments. Not only does the innovator and industrial partner benefit from technology transfer, even the local communities, and general masses at large benefit from them. This is due to the formation of new job opportunities due to technology transfer.
The transaction for technology transfer can either be open or secretive, international or national. It usually occurs through licensing agreements; however, sometimes, companies utilise alternate routes for technology transfer. IPR facilitates technology transfer by regulating the marker and preventing imitation. From the discourse above, it becomes clear that a balanced IPR regime is the most suitable one for technology transfer.
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