Transfer of Technologies

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TRANSFER OF TECHNOLOGIES
François Painchaud*
LEGER ROBIC RICHARD, L.L.P.
Lawyers, Patent and Trademark Agents
Centre CDP Capital
1001 Square-Victoria – Bloc E – 8th Floor
Montreal, Quebec, Canada H2Z 2B7
Tel. (514) 987 6242 – Fax (514) 845 7874
www.robic.ca – [email protected]
THE ACQUISITION OF TRADE SECRETS
Question: Can we acquire trade secrets and if so, how? Trade secrets may be
acquired in the general sense of the word. When assets of a company are
acquired and trade secrets are not part of the primary assets transferred, they
are generally covered by a catch-all clause concerning intellectual property.
But is it the same thing when a company wants access to a particular
technology, is ready to invest considerable sums of money into it and the
benefits in such a technology will be derived solely from its confidential
nature? Many would say that any "purchased" rights in a trade secret are
tenuous. However, all things considered, the potential return is frequently
worth the risk.
In such circumstances, certain precautions must be taken during the planning
and negotiation stages to ensure that all benefits are obtained, be it by
means of an acquisition or a licensing arrangement. These precautions should
include the following: (i) verification of the reputation of the other party (this
cannot be emphasized enough); (ii) while trade secrets are attributed certain
characteristics, it should be understood that they are not "goods" in the sense
of the Civil Code, thus the contract must clearly set forth the rights and
obligations of each party; for example, in the framework of an agreement
similar to an acquisition or an exclusive (worldwide) license, the holder of the
technology must undertake that he will cease using the technology and will
maintain its confidentiality (at least for as long as it remains secret); (iii) if the
transfer is of a non-exclusive nature or subject to territorial restrictions, the
other licensees of the holder of the technology must also keep the
technology confidential; (iv) in case of loss of confidentiality of the
technology, specific penal clauses must be included providing full or partial
reimbursement of the price paid or, in the case of a license, the cessation of
© CIPS, 1997.
* Of LEGER ROBIC RICHARD, L.L.P., a multidisciplinary firm of lawyers, and patent and
trademark agents. Published in the Summer 1997 issue (Vol. 1, No. 3) of our Newsletter.
Publication 068.006E
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royalty payments (or even a full or partial reimbursement of royalties paid);
and in all cases a clear right allowing the acquiring party to continue to use
the technology notwithstanding termination of the arrangement; (v) in the
case of a transaction similar to a sale and if the technology is patentable,
the right to obtain a patent must be assigned (as provided for in the
Patent Act).
In transfers of trade secrets, a number of clauses contained in your
agreements must be adapted to this particular type of transaction in order to
avoid or minimize the serious difficulties that may arise if the transaction does
not go as planned. This is also true in numerous other transactions involving a
transfer of technology, be it by means of licensing agreements, research
agreements or joint ventures. If you want to discuss the content of this article
or any other issues relating to technology transfers, do not hesitate to contact
François Painchaud or any other member of our firm’s technology transfer
group.
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ROBIC, un groupe d'avocats et d'agents de brevets et de marques de
commerce voué depuis 1892 à la protection et à la valorisation de la
propriété intellectuelle dans tous les domaines: brevets, dessins industriels et
modèles utilitaires; marques de commerce, marques de certification et
appellations d'origine; droits d'auteur, propriété littéraire et artistique, droits
voisins et de l'artiste interprète; informatique, logiciels et circuits intégrés;
biotechnologies, pharmaceutiques et obtentions végétales; secrets de
commerce, know-how et concurrence; licences, franchises et transferts de
technologies; commerce électronique, distribution et droit des affaires;
marquage, publicité et étiquetage; poursuite, litige et arbitrage; vérification
diligente et audit; et ce, tant au Canada qu'ailleurs dans le monde. La
maîtrise des intangibles. ROBIC, a group of lawyers and of patent and
trademark agents dedicated since 1892 to the protection and the
valorization of all fields of intellectual property: patents, industrial designs and
utility patents; trademarks, certification marks and indications of origin;
copyright and entertainment law, artists and performers, neighbouring rights;
computer,
software
and
integrated
circuits;
biotechnologies,
pharmaceuticals and plant breeders; trade secrets, know-how, competition
and anti-trust; licensing, franchising and technology transfers; e-commerce,
distribution and business law; marketing, publicity and labelling; prosecution
litigation and arbitration; due diligence; in Canada and throughout the world.
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