Know-How Transfer, Royalties and Confidentiality in Technology

Know-How

Know-how: By know-how must be understood all the specialized knowledge and experience embodied in procedures and technical achievements for making a product; such practical and technical knowledge can therefore be called manufacturing know-how.

Elements of Know-How

1. Parties:

   They are the giver / provider and the recipient (buyer). The giver is the natural person or legal entity that provides the technical knowledge involved. The recipient / buyer is the party that receives the technical knowledge and assumes the consequent obligation to keep it confidential.

2. Purpose:

   The purpose is to transfer technical knowledge. Knowledge and experience are not always transmitted in actum; sometimes they are provided only to the extent required by the recipient, and are accompanied by ongoing support to overcome difficulties and achieve a high degree of efficiency. In some cases, the provider enables recipient staff to appreciate the practical use of the transferred knowledge.

3. Price:

   Also known as an international royalty, the price is the essential consideration paid by the recipient for the transfer of the knowledge.

4. Time:

   In general, the term in this type of operation is five years or less, to avoid that knowledge becomes obsolete due to advances in technology and science.

Obligations of the Lender / Supplier

1. To transfer the knowledge in question:

   The supplier is obliged to pass on secret knowledge that is not patented; that is, to provide any information about it and to do everything necessary for the recipient to benefit financially by using the transferred technique.

   Besides the above, the use of the transferred technology should be exclusive as agreed, so the giver should refrain from transferring it to multiple recipients located in the same area unless otherwise provided in an express agreement.

2. Make improvements:

   The supplier is required to make improvements to the technical knowledge that it has provided, must communicate those improvements to the recipient, and must provide the recipient the right to benefit from them.

Obligations of the Recipient

1. Pay a royalty:

   The recipient must pay the agreed price or royalty in return for the secret knowledge transferred.

2. Non-disclosure (failure to yield knowledge):

   The recipient assumes the duty not to communicate or transmit the secret knowledge concerning the know-how.

3. Duty to exploit:

   Under this obligation, the recipient agrees to use the transferred knowledge and promote the sale of products manufactured using the transferred technology. In addition to the above, this obligation requires an express agreement and aims to keep the product on the market.

4. Make improvements:

   This also requires an express agreement, under which the recipient may commit to make improvements to the transferred secret information.

5. Return documents:

   After the operation, the recipient shall return all documents submitted by the lender that contain the secret knowledge transferred (drawings, manuals, etc.).