Transfer of Technologies

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TRANSFEROFTECHNOLOGIES

FrançoisPainchaud*

LEGERROBICRICHARD,
L.L.P.
Lawyers,PatentandTrademarkAgents
CentreCDPCapital
1001Square-Victoria–BlocE–8thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.(514)9876242–Fax(514)8457874
www.robic.ca–info@robic.com

THEACQUISITIONOFTRADESECRETS
Question:Canweacquiretradesecretsandifso,how?Tradesecretsmaybe
acquiredinthegeneralsenseoftheword.Whenassetsofacompanyare
acquiredandtradesecretsarenotpartoftheprimaryassetstransferred,they
aregenerallycoveredbyacatch-allclauseconcerningintellectualproperty.
Butisitthesamethingwhenacompanywantsaccesstoaparticular
technology,isreadytoinvestconsiderablesumsofmoneyintoitandthe
benefitsinsuchatechnologywillbederivedsolelyfromitsconfidential
nature?Manywouldsaythatany”purchased”rightsinatradesecretare
tenuous.However,allthingsconsidered,thepotentialreturnisfrequently
worththerisk.
Insuchcircumstances,certainprecautionsmustbetakenduringtheplanning
andnegotiationstagestoensurethatallbenefitsareobtained,beitby
meansofanacquisitionoralicensingarrangement.Theseprecautionsshould
includethefollowing:(i)verificationofthereputationoftheotherparty(this
cannotbeemphasizedenough);(ii)whiletradesecretsareattributedcertain
characteristics,itshouldbeunderstoodthattheyarenot”goods”inthesense
oftheCivilCode,thusthecontractmustclearlysetforththerightsand
obligationsofeachparty;forexample,intheframeworkofanagreement
similartoanacquisitionoranexclusive(worldwide)license,theholderofthe
technologymustundertakethathewillceaseusingthetechnologyandwill
maintainitsconfidentiality(atleastforaslongasitremainssecret);(iii)ifthe
transferisofanon-exclusivenatureorsubjecttoterritorialrestrictions,the
otherlicenseesoftheholderofthetechnologymustalsokeepthe
technologyconfidential;(iv)incaseoflossofconfidentialityofthe
technology,specificpenalclausesmustbeincludedprovidingfullorpartial
reimbursementofthepricepaidor,inthecaseofalicense,thecessationof

©CIPS,1997.
*OfLEGERROBICRICHARD
,L.L.P.,amultidisciplinaryfirmoflawyers,andpatentand
trademarkagents.PublishedintheSummer1997issue(Vol.1,No.3)ofourNewsletter.
Publication068.006E

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royaltypayments(orevenafullorpartialreimbursementofroyaltiespaid);
andinallcasesaclear
rightallowingtheacquiringpartytocontinuetouse
thetechnologynotwithstandingterminationofthearrangement;(v)inthe
caseofatransactionsimilartoasaleandifthetechnologyispatentable,
therighttoobtain
apatentmustbeassigned(asprovidedforinthe
PatentAct).
Intransfersoftradesecrets,anumberofclausescontainedinyour
agreementsmustbeadaptedtothisparticulartypeoftransactioninorderto
avoidorminimizetheseriousdifficultiesthatmayariseifthetransactiondoes
notgoasplanned.Thisisalsotrueinnumerousothertransactionsinvolvinga
transferoftechnology,beitbymeansoflicensingagreements,research
agreementsorjointventures.Ifyouwanttodiscussthecontentofthisarticle
oranyotherissuesrelatingtotechnologytransfers,donothesitatetocontact
FrançoisPainchaudoranyothermemberofourfirm’stechnologytransfer
group.

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