What Are Technology Transfer Agreements? Discuss Some of Their Merits

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The Answer is A technology transfer occurs when a business licenses its intellectual property to another firm. These contractual agreements generally permit a company to quickly penetrate a foreign market without incurring the substantial financial and legal risks associated with direct investment. It permits an intellectual property owner to grant to another the right to use protected technology in return for some form of compensation. This generally takes place through a licensing agreement.
Licensing provides numerous benefits for both licensors and licensees. Licensors directly benefit by receiving royalty payments and gaining a presence in a market that might otherwise be inaccessible. Furthermore, by licensing, a business minimizes its physical and financial presence overseas, thereby reducing the risks of suffering devastating losses in the event of an expropriation.
Despite its many benefits, technology licensing is not without its drawbacks. Perhaps the greatest risk is that the licensee, after gaining access to the licensor's technology, will sever the licensing relationship and become a competitor. If a licensor does not closely monitor the activities of a licensee, it runs the risk that the licensee will produce inferior products or provide inferior service. Further, some licensees cannot be trusted to honestly report their use of the licensed technology.

What Are Technology Transfer Agreements? Discuss Some of Their Merits

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