Technology transfer: Overview, definition, and example
What is technology transfer?
Technology transfer refers to the process of sharing or licensing technology, knowledge, or innovations from one party to another. This can happen between businesses, universities, or government entities and typically involves patents, trade secrets, software, or manufacturing processes.
For example, a university that develops a new medical device may license the technology to a private company for commercial production and distribution.
Why is technology transfer important?
Technology transfer allows businesses to access new innovations without having to develop them from scratch, saving time and costs. It also helps companies expand into new markets, improve efficiency, and stay competitive.
For SMBs, technology transfer can provide opportunities to adopt advanced technologies, such as software tools or patented processes, that would otherwise be too costly to develop independently. It also allows startups and research institutions to monetize their intellectual property by licensing or selling their innovations.
Understanding technology transfer through an example
Imagine a small manufacturing company wants to produce energy-efficient batteries but lacks the necessary technology. Instead of investing in years of research and development, the company licenses the battery technology from a university research lab. This allows the company to quickly bring a new product to market while the university earns royalties from the agreement.
In another scenario, a startup develops a cutting-edge AI algorithm for data analysis. Rather than commercializing the technology themselves, they transfer the rights to a larger tech firm in exchange for a licensing fee and future revenue sharing. This provides the startup with funding while allowing the larger company to integrate the technology into its existing products.
An example of a technology transfer clause
Here’s how a technology transfer clause might appear in a contract:
“The Provider agrees to grant the Recipient a non-exclusive, worldwide license to use, develop, and commercialize the transferred Technology. The Recipient shall pay royalties as agreed and shall not disclose or sublicense the Technology without prior written consent.”
Conclusion
Technology transfer enables businesses to access innovative solutions without the time and cost of in-house development. By leveraging technology developed by others, SMBs can enhance their competitiveness, improve efficiency, and bring new products to market faster. Well-structured technology transfer agreements ensure both parties benefit while protecting intellectual property rights.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.