How to draft a technology transfer agreement

Learn how to draft a Technology Transfer Agreement. What are the key concerns of parties, steps to be taken prior to entering into a TTA and the essential clauses it must include. Whether you’re a law student, a corporate lawyer, or a freelance legal professional, this guide will serve as a practical resource. 

Introduction

As a lawyer, most of my work involves clauses and controlled risks. But there are files: thin, red-flagged, and rarely discussed—that tell stories far more intriguing and intricate than any courtroom drama.

One such file arrived on my desk in a sealed envelope, no sender, no subject: just initials: “DRDO–R Unit”. Inside, the brief was skeletal but urgent. A Technology Transfer Agreement (“TTA”) was to be drafted between a scientific wing and an unnamed recipient agency. No publicity. No leaks. Total compliance with national secrecy protocols.

I was told only what was necessary: a prototype drone, developed internally by Ishaan, a junior scientist at DRDO, had shown unanticipated potential during a “non-standard field evaluation.” The kind of language that suggests field-testing occurred far from the laboratory and far beyond national borders.

The prototype drone was deceptively small. But the brief noted attributes that caught my legal eye: autonomous terrain adaptation, zero acoustic footprint, and thermal invisibility. No commercial vendor had cleared those benchmarks. It was unregistered, unclassified, and technically… unapproved. And yet, a covert agency was prepared to integrate it into a live mission.

I drafted the TTA with unusual care. It had to balance intellectual property claims with national security prerogatives. 

So now wait. Let me tell you what a TTA is and what it entails. 

A TTA is an agreement through which the owner of a technology grants rights to another party to use that technology for specific purposes, like manufacturing or deployment. It defines key terms like intellectual property ownership, usage rights, confidentiality, and territorial limits, ensuring that the technology is used responsibly, securely, and within controlled geographical limits.

Fast forward a few weeks: Ishaan’s drone was modified and deployed during an operation. It flew low and silently over enemy territory, transmitting precise intel to command centres. It was one of these drones that captured the moment a key target was exposed, marking the timing for a successful strike.

The mission succeeded, and Ishaan’s drone became an unsung hero in India’s modern warfare history.

Weeks later, I heard whispers—never formal confirmation—that the drone had “performed beyond expectation” during a special exploratory operation. 

Post-operation, Ishaan was permanently absorbed into DRDO. 

That one encounter with the RAW officer did not just alter the course of a mission, it changed Ishaan’s life, and quietly, the future of India’s defence technology. 

I still have the draft. Untitled. Locked away. A reminder that some of the most powerful agreements are those that remain unsigned in public view.

What are the types of TTAs? 

Also, these categories are not mutually exclusive; that means, a cross-border agreement can also be exclusive and involve both patents and know-how.

What should you consider before entering into a TTA? 

1. Due diligence of both parties

Like every other transaction, even in the case of a TTA, it is critical for both the transferor (licensor) and the transferee (licensee) to conduct thorough due diligence. 

When a party thoroughly investigates and evaluates the opposite party with respect to various aspects of the entity’s operations, legal standing, financial status, intellectual property rights, contracts, and other relevant factors, prior to entering into any agreement with it, it is called exercising due diligence. This exercise ensures that there are no hidden risks or liabilities.

This includes:

  • Financial credibility: Investigate if the parties are solvent and capable of meeting obligations.
  • Technical capability: Ensuring the licensee has the infrastructure to absorb and implement the technology.
  • Legal position: Verifying there are no ongoing litigations or IP disputes that could materially affect the deal.
  • Reputation and track record: Especially important in international deals or with government-funded technologies.

Example: If an Indian startup wants to license drone technology from a US-based firm, they must ensure the latter actually owns the technology and has the legal right to license it globally.

2. Assessment of IP ownership and status

The core of any TTA lies in the rights being transferred, these must be clear and valid:

  • Ownership verification: Confirm that the transferor holds the IP rights (patents, trademarks, trade secrets, etc.).
  • IP validity: Check patent expiry dates, renewal status, and pending litigation.
  • Territorial scope: Assess whether the IP is protected in the jurisdictions where it will be used.
  • Freedom to operate: Ensure the licensee won’t infringe third-party rights during use. 

Example: A patented medical device being licensed should be active and enforceable in the country where it’s going to be manufactured or marketed.

3. Scope of technology being transferred

Define clearly what is being transferred:

  • Technical documentation: Blueprints, schematics, manuals.
  • Training and support: Whether personnel training is included.
  • Software components: If proprietary code or tools are part of the transfer.
  • Future upgrades or improvements: Are they included or separately negotiated?

Example: DRDO transferring satellite telemetry software must specify whether it includes just the software or also related technical support and updates.

4. Jurisdiction and regulatory compliance

Especially for cross-border TTAs, legal and regulatory compliance is crucial:

  • Export control laws: Some technologies may be classified and require government clearance.
  • Tax implications on royalties, upfront fees and goods and services tax. 
  • Governing law and dispute resolution: Choose a neutral jurisdiction and decide on arbitration or courts.
  • Local IP regulations: Ensure compliance with local patent/technology licensing laws.

Example: A TTA between a French AI firm and a partner in India may be subject to EU data transfer regulations and Indian IT laws.

Discussions and concerns of both parties, and what was finally agreed upon between them? 

A technology transfer agreement is not merely a formality, it is a carefully structured contract that defines:

  • What is being transferred (know-how, patents, designs),
  • How it’s being used (field of use, territories),
  • And who owns the results (IP rights, improvements, royalties). 

Each clause shapes billions in downstream innovation.

In this draft, I will walk you through key clauses to never skip in a transfer deal

But before that, let me tell you what happened during negotiations, what the concerns of each party and what was finally agreed between both these terrific organisations. 

Once the prototype’s potential was clear, a high-level closed-door meeting was convened between officials of RAW, senior scientists from DRDO, and legal counsels from both ends. The objective was to structure a TTA that would be airtight in secrecy yet flexible enough to allow rapid deployment and upgrades.

Quite expectedly, RAW’s concerns were primarily strategic:

  • Exclusivity: RAW demanded that the technology remain off-limits to any private or foreign entity to ensure national security.
  • Field modification rights: They needed the ability to tweak the drone’s software and hardware for military use without lengthy approvals.
  • Rapid deployment timeline: Time was of the essence as the strike window is narrow.

DRDO’s concerns, on the other hand, were technical and legal:

  • IP retention: DRDO wanted to retain ownership of the core drone architecture and base software.
  • Credit to the innovator: They insisted Ishaan’s contribution be acknowledged formally, with scope for his continued involvement in future development.
  • Confidentiality & liability: DRDO sought strong indemnity clauses to protect its scientists from liability in case of mission failure or misuse.

What was finally agreed upon between the parties? 

After 72 hours of round-the-clock drafting, negotiations, and redlining, the agreement was signed under the codename “Project Garud”.

Key terms of the TTA included:

  • Exclusivity clause: The drone tech would be used solely by RAW and Indian defence agencies.
  • Confidentiality: All technical documents, schematics, and field data would be kept highly confidential. 
  • Royalty-free license: RAW would not pay per-use royalties, but DRDO would receive a one-time technology fee, with the government funding any upgrades.
  • Innovation clause: Ishaan would be formally inducted into DRDO’s and act as a liaison engineer for field implementation. 
  • Force majeure: The agreement included provisions for delays due to natural disasters or international border restrictions.

On to the next part, that is, how to draft such a TTA. 

Let’s get drafting without needing to be a scientist. 

At the outset, state the date and the place where the agreement is executed. 

Now come to identifying and describing parties- whether it is a registered entity, if yes, under which legislation and its registered address. If either party is a company, be sure to include a clause referencing their successors and assigns. Including this simple sentence can save you from significant legal complications if things go south. 

THIS AGREEMENT (“Agreement”) is made on [insert date and year] at [place where the agreement was executed]

BETWEEN

Defence Research and Development Organisation, established by the Govenment of India having its registered office address at New BEL Road, Bengaluru – 560094 (which expression shall unless it be repugnant hereinafter referred to as “the Transferor/Licensor” to the context or meaning thereof shall be deemed to mean and include its successors and assigns) of the ONE PART;

AND

Research and Analysis Wing, an agency established by the Government of India (whose expression shall, unless it be repugnant hereinafter referred to as “the Transferee/Licensee” to the context or meaning thereof shall be deemed to mean and include its successors and assigns) of the OTHER PART.

WHEREAS

This is a recital clause of the agreement. In this part, you give the background of the parties, how the parties came together, how the transaction fructified, and then introduce the product. Further, for the sake of clarity, it is crucial to mention that both parties are willing and have mutually consented to enter into this agreement

In case any correspondence (only if it is material) was exchanged between the parties with respect to the transaction, you should mention that as well. For instance, if the licensor had issued a tender, then state how the licensee was a successful bidder, so on and so forth. 

  1. The Transferor/Licensor is primarily responsible for space-based operations, space exploration, international space cooperation and development of related technologies. In furtherance of the objects, the Transferor developed a micro-drone designed for stealth navigation in mountainous regions (hereinafter called “the Product”), and 
  2. The Transferor/Licensor is in possession of extensive technical know-how and technical information concerning the manufacture of such product/s and has at its disposal skilled technical personnel to assist in the transfer of such know-how and technical information; 
  3. The Transferee/Licensee desires to obtain, and the Transferor/Licensor is willing to transfer/grant, the right and license to manufacture, use and sell the Product/s utilising technical Know-how furnished by the Transferor/Licensor on the terms and conditions recorded in this Agreement.

NOW THIS AGREEMENT WITNESSETH AND IT IS HEREBY MUTUALLY AGREED UPON BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS

1. DEFINITIONS

State and define key terms that you think require interpretation and a detailed explanation, like in this case, it could be Technical Know-How, Intellectual Property Rights, etc. 

It is pertinent to note that, for the sake of clarity and precision, once a term is defined within the agreement, it must be consistently capitalised throughout the document. For example, if the term Technical Know-how is defined, it should be referred to as Technical Know-how capitalised everywhere else in the agreement. 

2. GRANT OF LICENSE

License is a fancier term for permission. The representations in this clause help define each party’s rights and prevent disputes.

  1. The Transferor/Licensor hereby declares that it has a legal right to manufacture/produce the Product, using the technical know-how and intellectual property rights. 
  1. The Transferor/Licensor hereby grants to the Transferee/Licensee, right to manufacture/produce and use the Product/s using the technical know-how and intellectual property rights provided by the Transferor/Licensor.

3. DURATION

Duration is a crucial aspect in TTAs because, in this case, the licensor wants to retain long-term control over its intellectual property. Therefore, a limited duration allows for reevaluation or renegotiation based on performance or market changes.

This Agreement shall be effective for a period of the effective date of this Agreement. On expiry of the above-mentioned period, this Agreement shall expire without any notice. The parties’ approvals and a written agreement between them may agree to extend the period of the Agreement, subject to necessary approvals and on a written agreement between them. 

4. OBLIGATION OF THE TRANSFEROR/LICENSOR

Why are the obligations of the parties such a big deal in an agreement? That is because when obligations of the parties are charted out, it gives a solid basis for legal recourse if one party commits a default. 

Besides this, it also helps remove ambiguity about what each party is expected to do, helping avoid misunderstandings.

  1. Upon this Agreement coming into force, the Transferor/Licensor shall supply the Transferee/Licensee with the drawings for designing, manufacturing and assembling, specifications, materials list, general calculation sheet, data for inspections and trial operations, fabrication and assembly procedures, Operating and instruction manuals and other such necessary technical data and know-how generally used by the Transferor/Licensor in order that the Transferee/Licensee may manufacture/produce the Product/s without any delay.
  1. The Transferor/Licensor shall, upon the request of the Transferee/Licensee, allow and depute reasonable number of technical personnel designated by the Transferee/Licensee to have opportunity to observe the process of manufacture/production of the Product/s at the Transferor’s/Licensor’s place of business. The Transferee/Licensee shall inform the Transferor/Licensor, in advance, of the details of the Transferee’s/Licensee’s designated personnel desiring to visit the Transferor’s/Licensor’s place of Business. The Transferor/Licensor shall make available qualified personnel for consultation with, and training of, such Transferee’s/Licensee’s personnel. All the travelling and living expenses of the Transferee’s/Licensee’s personnel shall be borne by the Transferee/License only. 
  1. The Transferor/Licensor shall if requested provide the Transferee/ Licensee from time to time with a personnel or engineer to provide technical guidance in relation to manufacture/production and operation of the Product/s for a reasonable period provided the Transferee/Licensee agrees to pay consultancy fees and bear all travelling and living expense.
  1. Upon Transferee’s/Licensee’s written request, the Transferor/Licensor shall supply components, parts and raw materials to the Transferee/ Licensee in due time and at reasonable and competitive prices. 

5. IMPROVEMENTS

TTA is all about continuous collaboration, technological advancement and transparency, thus, this clause becomes indispensable. 

During the continuation of this Agreement if either party hereto discovers or acquires information or comes into the possession of any improvements or developments or further inventions in relation to the Product/s or design, manufacture or use of the same, the party shall furnish such information on improvements to the other party without any delay and free of charge.

6. CONSIDERATION AND OTHER PAYMENTS

Consideration, as we know, forms the very basis of a contract. 

Generally, as the Licensee utilizes the technical expertise and proprietary rights of the Licensor, the Licensee shall, naturally, be obligated to remit royalty payments, consultancy charges, and an upfront fee. 

But as we read above, the Parties hereto have agreed to a one-time technology fee, the specific terms and conditions governing these payments should be outlined herein.

In consideration of the technical know-how provided by the Transferor/Licensor to the Transferee/Licensee hereunder, the Transferee/Licensee shall pay to Transferor/Licensor a one-time technology fee in the amount and in the manner specified below:- 

(a) The Transferee/Licensee has made an initial payment of Rs. ________ upon signing of this Agreement;

(b) Further, upon completion of 6 months from the date of execution of this Agreement, the Transferee/Licensee shall pay the remaining fees of Rs. _____ to the Transferor/Licensor as under this Agreement.

(d) All payments made to the Transferor/Licensor hereunder shall be by means of a Demand Draft or a banker’s cheque or ______.

7. STATEMENT, ACCOUNTS, AUDIT AND REPORT 

Now, this clause is not of any relevance to this Agreement. But if your agreement involves the aspect of sale, royalty, etc., stating this clause is a must. 

This clause ensures transparency by requiring the Licensee to provide regular sales statements, maintain accurate accounts, and allow the Licensor to audit financial records to verify royalty payments. The Licensee must also submit a detailed report with each royalty payment, outlining sales and product details.

  1. The Transferee/Licensee shall, within a calendar month, furnish Statements setting out full details of the days of the end of each quantity of the Product/s sold during such month for the purpose of showing amounts due in respect of Royalty.
  1. The Transferee/Licensee shall make available at its usual place of business full and proper accounts containing such true entries as may be necessary or appropriate for enabling the amount of the fees due hereunder to be conveniently ascertained and shall at all reasonable times produce the said accounts and all other relevant accounting documents and information to the Transferor/Licensor or to a qualified accountant or other person duly authorized by the Transferor/Licensor and shall permit him, her or them to inspect the same and take copies or extracts there from and shall give all such other information as may be necessary or appropriate to enable the amount of the royalties payable hereunder to be ascertained; and
  1. The Transferee/Licensee shall also submit a written report at the time of remitting the royalties stating the net selling price, overall order price with clients, the number, and the type of product/s sold or used by the Transferee/Licensee under this Agreement.

8. GUARANTEE

This clause ensures a certain degree of risk mitigation and legal enforceability. 

  1. The Transferor/Licensor guarantees and shall be responsible for damage resulting from defective technical information and parts furnished to Transferee/Licensee by Transferor/Licensor during the terms of this Agreement.
  2. The Transferor/Licensor shall not guarantee or be held responsible for consequential damages resulting from the faulty application of technical information by the Transferee/Licensee.

9. TERMINATION

It is understood that an agreement is not perpetual. Thus, termination clauses are included in agreements to clearly define the conditions under which the contract can be ended by either party before its natural expiry.

  1. Upon either party continuing default of any obligation imposed on it for a period of This by registered post by the other party asking the party in default to after being served with a written notice rectify such default, the other party may terminate this Agreement by serving another notice to that effect by Registered Post to the first party. 

In our case, the clause below is of no significance. But if your client is a company or an individual, you must stipulate this clause. 

  1. Either party is wound up by the Orders of any Court of Law or liquidation proceedings are instituted against a party and the One proceedings are not dismissed within forty five (45) days after commencement.

10. TRANSFEREE/LICENSEE’S COVENANTS

Convenants are nothing but a list of things to do and to avoid in an agreement. These terms protect the interests of the parties, ensure compliance with key conditions and provide grounds for termination or legal remedy if breached.

  1. The Transferee/Licensee hereby agrees with the Transferor/Licensor that it shall be responsible for manufacturing/producing the Product/s in a proper manner and in accordance with the established methods and standards. 
  2. The Transferee/Licensee shall not employ or otherwise engage any employee or former employee of the Transferor/Licensor who is involved in the implementation of this Agreement without the prior consent in writing of the Transferor/Licensor. 

11. LIMITATION OF LIABILITY

Take, for instance, if an earthquake in Japan delays a tech company from sending training staff or documents to India, what happens in such a case? 

Will the Japanese company be held responsible to indemnify the Indian company? 

The answer to this is no. Thanks to the limited liability clause, which stipulates exceptions for taking responsibility and indemnifying against such loss. 

  1. The Transferor/Licensor shall proceed with its usual care in preparing, selecting and transmitting documentation, technical information and/ or improvements to the transferor/licensor. However, the transferor/ licensor shall not be responsible for any bona fide oversight which may occur in spite of such care.
  2. Neither party to this Agreement shall be liable for any failure or delay on its part in performing any of its obligations under this Agreement or for any losses, damages, costs, charges or expenses incurred or suffered by the other party by reason of such failure or delay, if and so far as such failure or delay shall be the result of or arising out of force majeure.

What is a force majeure event? And what is the purpose of this clause in a contract? 

A force majeure event is an unforeseeable and unavoidable event which is beyond the control of either party. Such events prevent one or both parties from fulfilling their contractual obligations. Events such as natural disasters, war or terrorism, epidemic or pandemic, strikes or labour disturbance, etc, are classified as force majeure events. 

Its purpose is to protect parties from liability if they cannot perform due to such extraordinary events. For example, if DRDO cannot deliver on time because of a city-wide blackout caused by a flood, the force majeure clause may excuse the delay.

12. TRADEMARK AND BRAND NAME

This clause allows controlled use of trademarks and prevents misuse, dilution, or reputational harm. Further, as agreed between the parties at the time of negotiations, this clause ensures that the licensor retains complete ownership of the technical know-how of the product.

  1. The Licensor hereby grants to the Licensee a non-transferable, non-sublicensable, and non-assignable license to use the Licensor’s trademarks strictly in connection with the manufacture and production of the micro-drones, as per the technological know-how provided under this Agreement.
  2. The use of Licensor’s trademarks by the Licensee shall be subject to the Licensor’s prior written approval in all instances and shall at all times adhere to the guidelines and quality standards prescribed by the Licensor. The Licensee shall not use the trademarks in any manner that may mislead or deceive the public, or that may adversely affect the reputation or goodwill associated with DRDO.
  3. The Licensor retains full ownership of all intellectual property rights, including the trademarks, and nothing in this Agreement shall be construed as a transfer of such rights to RAW. 
  4.  Upon expiration or termination of this Agreement, the Licensee shall immediately cease all use of the Licensor’s trademarks and return or destroy any materials bearing the trademarks as directed by the Licensor.

13. EXCLUSIVITY

As agreed between the parties, the technical know-how must be exclusively used by the licensee. This is mainly to beat the competition in the market space. 

However, in this case, it exclusive in the best interest of the company. 

  1. The Licensor hereby grants the Licensee an exclusive license to use the provided technical know-how and associated trademarks solely for manufacturing and producing the Product within the defined Contract Territory.

So, a contract territory is nothing but a specific geographic area or market in which the Licensee is authorized to use the technical know-how and trademarks granted under the agreement. 

This term is usually defined in the agreement to mean the Republic of India. This implies that the Licensee shall have exclusive rights to manufacture and use the Product within this territory only.

  1. During the term of this Agreement, the Licensee shall not license, transfer, or otherwise permit any third party to use the same technical know-how or trademarks for the manufacture or production of the Product within the contract territory. 
  2. Nothing in this clause shall restrict the Licensor from using or licensing the same technological know-how or trademarks outside the contract territory, or for purposes unrelated to the Product.

14. SECRECY

This clause is in the best interest of the country. 

The transferee/licensee agrees that it shall not, in any case, sell, assign or divulge the technical know-how of the Transferor/Licensor under this Agreement in any manner to anyone except know-how and intellectual property rights disclosed and provided by the information in the manufacture/production of the Product/s. 

15. AGREEMENT TO BE EXECUTED IN DUPLICATE

This shall ensure that both parties have original agreements. 

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and the said counterparts shall together constitute but one and the same Agreement. 

16. NOTICES 

This clause specifies the manner in which all official communications between the parties are to be made. Most importantly, it defines when a notice is considered legally served even when the recipient refuses or avoids accepting it. 

Any notice or other communication of like nature that may be given by one party to the other shall always be in writing in English/Hindi/Marathi language and shall be served by hand delivery, duly acknowledged or sent by Registered Post with acknowledgement due or through electronic mode. Any such communication shall be deemed to have been served when sent by Registered Post when the same is actually received by the addressee. There shall be deemed acceptance of the communication in case of refusal/evasion of service of the communication.

17. INDEMNITY 

An indemnity clause protects one party from losses caused by the other’s actions like misuse, breach, or legal violations.

Take, for instance, if RAW uses DRDO’s drone tech improperly and it causes harm or sparks a lawsuit, who should be held liable in such a case? 

DRDO, right? This clause ensures accountability and financial protection in high-stakes transactions.

The Licensor shall indemnify, defend, and hold harmless the Licensee, its officers, employees, and affiliates from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorney’s fees) arising out of:

  1. any use, misuse, or unauthorised use of the transferred technology or trademarks by the Licensee;
  2. any manufacturing defect, product liability, or harm caused by products manufactured using the Licensee’s technology;
  3. any breach by the Licensee of the terms and conditions of this Agreement;
  4. any violation of applicable laws, regulations, or third-party rights by the Licensee in the course of manufacturing or using the technology.


The Licensor shall indemnify and hold harmless the Licensee from any third-party claims alleging that the technology licensed under this Agreement infringes any intellectual property rights, provided that:

  1. Such a claim is not due to any modification or misuse of the technology by RAW; 
  2. RAW promptly notifies DRDO of any such claim and allows DRDO to control the defence and settlement of the claim.

18. ADDRESS OF THE TRANSFEROR/LICENSOR AND TRANSFEREE/ LICENSEE 

State the addresses for delivery of notice or such other communication. 

19. LANGUAGE

Especially in the case of cross-border transactions, it is essential to clarify the language.  

The language to be used in rendering the Technical Know-how furnished to the Transferee/Licensee by the Transferor/Licensor under this Agreement shall be in English. The language for correspondence between the parties and any documentation shall be in English.

20. NO WAIVER

The purpose of this clause protect both parties by making clear that a delay or failure to act does not entail giving up on legal rights, allowing them to enforce the agreement later if needed.

The waiver or failure of either party to exercise any right in any respect provided in this Agreement shall not be deemed to be a waiver of any other right or remedy to which the party may be entitled.

21. ENTIRETY OF AGREEMENT

This clause ensures that only what’s written in the agreement is legally binding, overriding any prior discussions or informal understandings. 

The terms and conditions set forth herein constitute the entire agreement between the parties and supersede any communications or previous agreements with respect to the subject matter of this Agreement. There are no written or oral understandings directly and/or indirectly related to this Agreement that are not set forth herein. No change can be made to this Agreement other than in writing and signed by both parties.

22. ARBITRATION

Arbitration shall ensure that the disputes, if any arise between the parties can be addressed and adjudicated in complete secrecy as against court proceedings. Thus, such agreements usually have an arbitration clause in place. Besides several other advantages of arbitration, the secrecy factor will always stand out in this case. 

Any dispute arising under or by virtue of this Agreement or any difference of opinion between the parties hereto concerning their rights and obligations under this Agreement shall be finally resolved by arbitration. Such arbitration proceedings shall take place in accordance with the Arbitration and Conciliation Act, 1996. Such Arbitration proceedings shall be held at and shall be conducted in the English Language. The arbitration shall be held in Bengluru. The decision of the arbitral Tribunal shall be final and binding upon both parties.

23. GOVERNING LAWS 

This is very relevant when the transactions are cross-border or interstate. This clause ensures clarity by specifying which country’s laws apply and which courts will handle any disputes.

This Agreement shall be construed and interpreted in accordance with the laws of India

24. LEGAL CHARGES

It is in the best interest of both parties that an understanding with respect to legal charges is recorded. 

Each Party shall bear and pay its own legal charges.

Legal terms, along with the technical details may not be a good read. Thus, it is smarter to put the technical details in a separate schedule altogether. A schedule in an agreement is needed to provide detailed, structured and easily referable information that supports or supplements the main terms of the contract. 

THE FIRST SCHEDULE ABOVE IS REFERRED TO 

(You may provide specifications of the technical know-how)

THE SECOND SCHEDULE ABOVE REFERRED TO 

(You may provide specifications of the intellectual property)

THE THIRD SCHEDULE ABOVE REFERRED TO 

(You may provide specifications of the product)

Hereafter, the parties shall execute the agreement by affixing their signature. 

Generally, when a company is a party to this agreement, the signing authority shall also produce a Board Resolution authorising such a person to execute the agreement. These organisations are government entities; thus, the requirement to produce a board resolution is dispensed with.  

IN WITNESS WHEREOF, the parties hereto have set and subscribed their respective hands

on the day and year mentioned.

THE COMMON SEAL of the within-named

“THE TRANSFEROR/LICENSOR”

DEFENCE RESEARCH AND DEVELOPMENT ORGANISATION 

was hereunto affixed in the presence of

1.

2. 

THE COMMON SEAL of the within-named 

“THE TRANSFEREE/LICENSEE”

RESEARCH AND ANALYSIS WING

In the presence of 

1.

2.

Overview of the stamp duty and registration implications?

The stamping of a TTA depends on how the agreement is legally classified. It is either a license agreement or a transfer of intellectual property rights (which is, in some cases is akin to a conveyance).

  1. A TTA usually involves:
  • Licensing of know-how (not sale or assignment).
  • Often includes non-exclusive or exclusive manufacturing rights.
  • May also include use of trademarks, patents, and designs. 

In such cases, it is typically treated as a license agreement under state-specific stamp laws.

  1. Stamp duty in India is a state subject, meaning rates vary by state. However, the general approach is as follows:
  1. A license to use intellectual property (e.g., know-how, trademarks, patents) is usually treated as a license agreement. (For instance, as per the Maharashtra Stamp Act 1958, it is 0.5% of the amount agreed in the contract); 
  2. Assignment/transfer of intellectual property rights:
  • If the agreement involves actual assignment or sale of IP, it could be classified as a conveyance.
  • This attracts higher stamp duty, often ad valorem (based on the value of the rights transferred).
  1. Execution and stamping procedure
  • The agreement must be executed on non-judicial stamp paper of appropriate value before or at the time of execution.
  • Alternatively, you can pay e-stamp duty through official online portals.
  • Stamping must be done before use in evidence or registration; otherwise, penalty fees apply.
  1. Penalties for non-stamping

If the agreement is unstamped or inadequately stamped, it:

  • It cannot be admitted as evidence in court.
  • May attract a penalty up to 10 times the deficient amount, depending on the state legislation.
  1. Registration of the TTA is not mandatory as per the Registration Act, 1908. But to strengthen a document, it must be registered. 

Final thoughts 

A well-drafted TTA is essential to ensure that the transfer of proprietary know-how, intellectual property, and associated rights is legally sound, commercially viable, and clearly understood by both parties. 

It must define the scope of the technology, protect the licensor’s intellectual property, set out commercial terms, and address regulatory compliance. 

Proper stamping under the Indian Stamp Act is mandatory for enforceability, and registration with relevant IP authorities is required in case of assignment of rights. Though not always legally required, voluntary registration of the agreement can strengthen its evidentiary value. 

Ultimately, a TTA should strike a balance between commercial goals and legal safeguards, serving as a solid foundation for a successful technology collaboration.

FAQs

  1. What types of technologies can be transferred in a TTA?

TTAs can apply to various technologies, including software, patented inventions, trade secrets, biotechnologies, manufacturing processes, etc. 

  1. What are the key components of a TTA?

Key components typically include definitions of important clauses, licensing terms,  payment terms, confidentiality, ownership rights and dispute resolution. 

  1. What are the different types of technology transfer?

There are various types of technology transfer agreements, including:

  • Licensing Agreements: Granting the right to use technology under specified conditions.
  • Joint Development Agreements (JDA): Collaborating on new technology development.
  • Outright Sale: Transferring ownership of the technology in exchange for payment.
  • Research Collaboration Agreements: Sharing findings from research to jointly develop new technologies.
  1. What is the difference between exclusive and non-exclusive licensing?
  • Exclusive Licensing: The licensee is the only entity allowed to use the technology within a specified region or field, and the licensor cannot grant such rights to others.
  • Non-Exclusive Licensing: The licensor can grant similar licenses to multiple licensees, allowing more than one entity to use the technology.
  1. What are royalties in the context of TTAs?

Royalties are payments made by the licensee to the licensor in lieu of the use of the technology. These payments are based on sales revenue, a lump-sum fee, or other factors as specified in the agreement.

  1. What are the common risks associated with TTAs?

Common risks include:

  • Infringement of IP: The potential for infringement exists if the technology is not protected as per the provisions of the agreement.
  • Non-compliance with terms: Parties may fail to adhere to the agreement’s conditions.
  • Market risk: The technology may not perform as expected in the commercial market.
  • Confidentiality breaches: Risk of sensitive information being disclosed.
  1. What are the benefits of technology transfer?
  • Commercialisation: Technology transfer enables companies to bring new technologies to market, potentially generating revenue.
  • Innovation: By sharing technologies, organisations can promote innovation and improvement.
  • Global reach: A TTA can help a technology expand to new regions or industries.
  • Collaboration: It fosters partnerships between research institutions, universities, and commercial entities.
  1. What is the role of due diligence in a Technology Transfer Agreement?

Due diligence ensures that the technology being transferred is viable, legally protected and free from disputes. It often includes reviewing IP rights, the market potential of the technology, and the financial stability of the parties involved.

  1. What happens if a TTA is breached?

If a party breaches the agreement, the other party may seek remedies such as termination of the agreement, financial compensation, or other legal actions. 

  1. Can a TTA involve multiple countries?

Yes, TTAs can involve multiple countries, and that requires compliance with different countries’ IP laws, export control regulations, and tax implications.

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