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20 June 2006

Know-how and Technology Transfer

Secret "know-how", otherwise known as a trade secret or confidential information, can be considered to be some form of information, normally used in confidence by an individual or company in order to provide a competitive advantage to their business.

Know-how will often be disclosed in conjunction with a technology transfer or licensing agreement, and as a result of the competitive advantage associated with same, is an asset that can play an important role in such licensing of technology. This is particularly true when the know-how relates to the implementation of a patented technology, and is thus an important aspect of a
company's intellectual property which should not be overlooked.

To the uninitiated, a license agreement suggests the licensing or transfer solely of patented technology. Although in theory a patent is intended to provide a complete technical disclosure of the invention in question, it is often the case that a patent application is filed while the technology is at a conceptual stage. When the technology is subsequently advanced to the level of actual implementation or commercialisation, significant empirical or other related/peripheral information may have been amassed in the process of taking the technology from conception to realisation.

This accumulated/peripheral information, or know-how, can take many forms. For example, know how may relate to the fine-tuning of operating parameters for a particular process, the most efficient layout of a factory floor or assembly line, training in the operation of a new computer based system, or a specific temperature range to be used during a particular moulding process. While most if not all of this information could be obtained through conventional trial and error, its availability, in particular during the initial phases of the implementation of a new technology, can significantly reduce the time and effort in bringing the new technology to market. This type of intellectual property should therefore be given close consideration when looking to license a technology, whether through the granting or obtaining of a license.

Those regularly involved with licenses or the licensing of technology will be aware of the frequency with which the issue of know-how arises, but again for those new to this area , it should not be overlooked on the assumption that the patent or patents under which a license is being issued contains all of the requisite information to effectively put the technology into practice. Thus a company seeking to license a third party's technology should first investigate whether or not such know-how exists and/or the extent to which it is applicable to the implementation of the technology. If such know-how exists, provisions should be incorporated into any license agreement to transfer the know-how. In practice, the transfer of such know-how can and is likely to take various forms, from the simple written documentation of same through to initial and often ongoing training by the licensor.

Conversely, if a business intends to grant a license then it is worthwhile to be fully aware of the significance that know-how can play in the overall scheme of a license agreement. It can thus be helpful, when seeking to license out technology, to compile, in a suitable form, all related know-and trade secrets which have a bearing on the initial and ongoing implementation of the technology to be licensed. This may also involve making available certain personnel within the company to offer assistance/training to the licensee, for example by way of site visits to the licensee.

Thus, although know-how is an intangible asset and therefore often overlooked, it can be an important and powerful tool in the licensing of technology.

Brian O'Neill, FRKelly

First appeared in Techsearch Newsletter

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