UNIVERSITY OF PETROLEUM AND ENERGY

STUDIES

School of Law

Technology Transfer: Issues and Challenges

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Introduction

Technology Transfer (also called Transfer of Technology (TOT) and Technology

Commercialization) are the processes by which the information or knowledge related to the
technological aspects travel within the group or between the organizations or entity. Taking
this to the broader scenario, give rise to International technology transfer in which the
knowledge travels in between the countries, which is not only limited to the Knowledge and
information, rather includes skill transferring, methods of manufacturing, physical assets,
know-how, and other technical aspects, and henceforth helps in further development of the
technology and innovation, by effectively utilizing the technology transferred and finally
incorporating it.

Technology transfer has been used in the movements of technology from the laboratory to
industry or from one application to another domain application or taking developing countries
into consideration technology transfer helps in growing access to technologies which are
related to other developed countries and henceforth helps in approaching towards the newer
technologies and inventions i.e. from Developed to developing countries.

On the other hand licensing is allowance granted by the patent owner to another person or
organization for using the patented invention on agreed terms and conditions, while the patent
owner continues maintaining his ownership to the patent and hereafter becomes the source of
income by receiving the predetermined royalties or as per the condition.

So by combining the concept of the technology transfer with the licensing one can help in
taking the benefit of the technology research that has been done previously, as licensing creates
the permissible structure for the transfer of the technology to a larger assembly of researchers
and engineers, which will help in saving the expenses of conducting the research and the costs
of maintaining development activities or facilities and hence will help in the further
development of the technology which has already been done.

As now a days in the era of the advancement in the technologies there are many technologies
which with the combination with the other technologies is giving birth to the other new advent
technologies. so here the licensing do play the important role in providing the legal platform to
utilize the combination of the technologies made or discovered by the other persons or the
organization which has been created earlier, and hereafter prevents from wastage of the time
and the research cost incurred in developing the earlier inventions.1

Advantages related to Technology Transfer

The advantages related to technology transfer comprises of the essential gain to the public who
benefits from the manufactured goods that get to the market and ultimately the availability of
the jobs which results from the improvement and sale of the products so formed. And hence it
encourages use of technology developed and the benefiting to the society development which
comes from the revenue of the tax payers. And escalating visibility to researchers and allows
researcher to generate and earn royalty income and henceforth attaining financial profits for

http://www.mondaq.com/india/x/346256/Licensing+Syndication/Licensing+And+Technology+Transfer+A+Gla
nce+On+Indian+Scenario

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the government and the employees from royalty payments for those technology transfers that
involve patent licenses.

Moreover resulting in commercialization of the researches and the discoveries made, which
was the course of the investment done for the development and being protected by the patent.
Hereafter all the Investments done in the course of the development in intellectual property are
returned to the public through products made for the public, opportunity of more employment,
and revenue in the form of taxes.

Technology transfer strengthens industry by identifying new business opportunities which

contributes to enhancing the know-how and competitiveness of the technology providers,
which ultimately results in broadening the business area and re-focusing to the technologies
and systems to serve several different fields. In addition, technology transfer promotes the
wider use and awareness of technology and systems.

Technology transfer brings economic benefits by increasing revenues for both technology
donors and receiver's benefits with new and better products, processes, and services that lead
to increased efficiency and effectiveness, greater market share and increased profits.

Moreover technology transfer helps in earning rewards which is above and beyond the regular
salary which is received through patents, licenses, and other technology transfer awards which
help in benefiting intellectually and professionally through working collaboratively with their
peers in the industrial sector.

Disadvantages related to Technology Transfer

As technology transfer is keen or meant for the business oriented activity, hence forth there can
be the chances to have financial or commercial risk, as we are well aware that Licences can
generate the income, but patent application which are not licensed will only cost money.

Even when the transfer programme related to the technology transfer is successful or in
particular after technology transfer institutional tensions may arise within the organization
which may be in between the recipient of licensing income and those who know they will never
make utilizable inventions. For the sake of remedy in those circumstances Institutional policies
can be made aiming to have partial rearrangement of income received by license between all
research groups but, using this strategy may not eradicate the problem rather in most of the
cases discoverer will be frustrated or disappointed because the income that they have earned is
given to other groups. Technology transfer activities may put researchers in conflict of interest
situations, especially when the transfer involves the creation of the spin- off company, hence
Institutions should be aware of these possible dangers.

Moreover problem can be because of non performance of licensee. And may be the licensee
has limited chances beyond the license scope unless future enhancements to patent included in
initial agreement and Unrealistic expectations and demands from licensor.

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Indian scenario regarding the licensing and Technology Transfer

Technology in India is growing exponentially and has played an important role in all round
development and growth of economy in the country, India has opted for a wise mix of original
and imported technology. Henceforth "Technology transfer" plays a very important role and is
generally covered by a technology transfer agreement.

Developing countries like India generally not follow the usual path for development with
regard to technologies but use their advantage in the cutting edge technology options which is
now available and put the tools to use this modern technology.

Technology transfer is assumed to get benefits from R&D which is shared with the developing
and underdeveloped countries , so taking this to the point of consideration National research
laboratories is been constructed by the Indian government for the purpose of R&D which is yet
to be commenced by the private sectors.

India generally comprises of Small and medium enterprises and is growing since liberalization,
which has resulted in growth of The multinational enterprises, which in turn is competing with
the international companies which has enhanced the confidence of India. Not only confined to
the pharmaceuticals but is broadly categorized in other areas too such as agriculture, dairy and
other technologies.

Government of India is in the verge to open Technology Transfer Offices, Universities,

institutions which will be funded by central government and will acts as mechanism for
transferring or exporting the research conducted and its outcome to the desired place.

Though some of the Indian Institutes have been already commercializing their research and are
successful in technology transfer in which they have been licensed as technologies to industry.
Moreover, numerous cases of technology transfer are seen in India by various well-known
institutions.

Issues and Challenges associated with Technology Transfer

While the technology inflows may be through various means as explained, there are many
issues and challenges foreseen in respect of our goal of achieving self-reliance and
becoming leading technology house through technology transfer. Some of the critical
issues related to technology transfer are the following:

Relevance and Depth

The vendor may offer transfer of technology not directly related to the product or system
being procured. Hence, the offers from foreign vendors need very careful and in -depth
scrutiny to ensure that the technology being offered is relevant to defence applications
both current and futuristic. Also, the depth of technology being offered for local
manufacture for the systems / products is crucial to the development of local industry. The

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practice of holding back critical technologies by the vendors calling them proprietary and
necessitating continuous dependence on them for local manufacture of products need to
be addressed during contract negotiations.
Today the products and sub-systems are very software intensive. The software has become
a component in most of the sub-systems. The know-how transfer should essentially address
this even if the processes and procedures for its implementation are considered to be
tedious.
In the present day context, where outsourcing of product development activities including
design of sub systems, accessories, etc. are in common practice, we must critically assess
the foreign supplier’s actual possession of technology and his capability to transfer it. We
need to evaluate the suppliers in this regard at a much greater depth during the process of
selection.

International status

The technology on offer should be assessed for its current position in the international
market and its capability of remaining current for the period of its intended application by
the user agency. This will help us avoid the pitfalls of giving credit to sub -standard or
obsolete offers for technology transfer.

Capability of Indian Industry

The capability of the local industry to absorb the technology being transferred is a critical
factor. Indian Defence Industry with strong R&D base and Defence R&D establishm ents
are certainly capable of absorbing and translating the critical technology into products and
systems needed by defence. For example, Bharat Electronics Limited (BEL) spends
approximately 5 per cent of its annual sales turnover on Research and Developm ent, with
more than 1200 qualified engineers working on R&D projects. Assimilating technology in
a related area and building further on it, poses no hurdles to BEL. There are other capable
Indian defence industries also and along with OFB and the DRDO labs, the indigenous
capability for technology absorption is indisputable.
However, this critical aspect of the Indian industry could face a technical challenge in
future endeavours where the absorption of imported technology is carried out within
specified time-frames and applied either directly for new products or in related areas for
diverse product ranges.

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It should be noted, however, that mere substitution of proprietary components with
indigenous ones would take us only a limited distance forward in areas of improving
existing products. The emphasis should be on internalizing the capabilities in such a way
that new and diversified products can be developed in-house by leveraging the transferred
foreign technology.

Industrial Returns

Apart from the most important aspect of meeting the vital defence needs for which the
technology is imported in the first place, the technology on offer must necessarily bring
in industrial returns either from domestic market or from international market or from both
and therefore should be assessed for this potential.

License Issues

Frequently, it is found that the technology concerned is subject to approval of the foreign
government and hence obtaining latest technology becomes difficult. In many areas of
cutting-edge technologies, foreign suppliers do not part with their technologies citing
patents, IPRs etc., or may fix enormous prices for the same. Even in cases where the
supplier is willing to sell the technology for a price, the governments in question do not
permit the same under their respective export control regime. A very expensive and
extensive licensing procedure, which is a very time consuming, has to be gone through in
order for the product / technology to be exported. Finally, there are certain products /
technologies that are barred for exports to certain third world countries and certain
organizations.

Determination of Multiplier Factor

Since Technology transfer becomes a key component of the Offset agreement, suitable
multiplier factors may need to be worked out, if required, to promote and encourage the
foreign supplier who is willing to transfer the necessary technology. The negotiated value
of the technology is often based on the foreign supplier’s prior investment in research and
development, the market value of the technology or the cost of developing the technology
in India. Multipliers should be applicable only for very critical technology and that too if
transferred totally so that Indian industries can further develop on them.

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Conclusion

Technology transfer and its licensing have played a crucial role in all round development and
the advent of the technology which in results help in the development of the economy of the
country. Hence forth helps in creating the wealth to the country.

India as a developing country need to work on the technology development and technology
transfer and needs to make a building strategy comprising of the construction of new offices
related to technology transfer and to make youngsters aware to the benefits related to the
technology transfer, by establishing the specified universities and henceforth increasing the
pace of the technology transfer and technical research and development in technical
perspective.

Finally as discussed we can conclude that there is the possible advantage and disadvantage of
the technology transfer. But we have to see this in the broader aspect so that our country as
well as the citizen of our country should be benefited.

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