International Technology Licensing Contracts, Legal Risks And Countermeasures

In the Middle of 1980s, People's Republic of China ("PRC") has established a"market for technology"policy, aiming to trade market share for advanced technologies from multinational corporations. Under such background, PRC issued certain compulsory regulations concerning technology licensing. Pursuant to the Law of PRC Foreign Enterprise prior to its revision in year 2000, all foreign enterprise proposed to establish in PRC were required to adopt advanced technologies. With the entry of WTO, PRC has lifted the above legal requirement concerning technology licensing and extended period of patent rights, which on one hand create a better environment for technology licensing, on the other hand, resulted in market monopoly status of multinational corporations.On the level of macro economy, as there are a necessary process of introduction, digestion, absorption in technology licensing, relations between parties to technology licensing are not only trade deals but also instruction affairs. When grant technology licensing, the licensor potentially cultivating its competitors. For purpose of maintain its advantageous position, the licensor inevitably utilizing all means to restrict its potential rivals.On the level of micro economy, because of inherent difference of bargaining power and strong desire of technology import of domestic enterprises, rights and obligations in technology licensing agreement are substantially unbalanced in most cases. The main legal risks of technology licensing agreement are as follows:1.Restrictive business clauses. Restrictive business clauses interfere with fair competition and are materially adverse to economy of developing economy. Therefore, restrictive business clauses have always been the focus of legislation of international intellectual law. For instance, the section 4 of Code of Conduct of International Transfer of Technology (Draft) was the key point and resulted in endless debate between developed countries and developing countries. Meanwhile, Trips agreement has pointed out governments of WTO members are entitled to adopt appropriate measures to curb misuse of intellectual properties.2.Infringement and warranty of titles clause. Because of intangibly characteristic of intellectual property, the licensee of international technology licensing agreement shall bear higher risks of infringement than ordinary international goods trade.3.Licensing fee. Although in developing countries, for instance in USA, technology licensing fees clause including payment method, rate of charge are only subject market adjustment based on philosophy of free market. With the emergence of patent pooling and a series of patent fee issues initiated by multinational corporations, the legislator shall be no longer indifferent to licensing fee clause in technology licensing agreement.This thesis is based on legal status of PRC and with special concern on legal risks in international technology licensing agreement. In comparison with legislation and practice of developing countries in such field, the author aims to make constructive suggestion in coping with legal risks in international technology licensing agreement.