In the International Know-How License Agreement, a company (Seller) transfers to another company located in a different country (Buyer) the set of technical knowledge necessary to carry out a production process, as well as the necessary technical assistance and even certain materials and components. Companies use this kind of contracts to make the most of their R&D&I knowledge, especially in the industrial sector, but also in the service sector.
In this Agreement, intangible assets that belong to the field of industrial and commercial trade secrets are assigned, although these secrets cannot be patented, since in that case the International Manufacturing License Agreement, used to assign the use of a duly registered Intellectual Property Right (patent, utility model, copyright, etc.), must be used.
The Agreement defines the territorial scope (usually a country) whereby the company acquiring the Know-How is granted the exclusive rights for the use of the transferred know-how. It also includes a confidentiality clause that protects the information provided, and provides for compensation in the event of non-compliance.
Parties clauses
- Object
- Technical Assistance
- Consideration
- License for use
- Exclusivity
- Warranty
- Intellectual Property Rights
- Confidentiality
- Assignment
- Nullity and ineffectiveness of clauses
- Duration
- Termination
- Notifications
- Expenses and taxes
- Applicable Law and competent jurisdiction
- Language
Sample of Content
DATE: …………………………….
BETWEEN:
…………………………… [company legal name] whose registered office is at ……………………………….
[address, city and country] and registration/fiscal number is ………………………………………………..
represented by ……………………………………………………. [name and surname, position]
(hereinafter, referred to as the “Seller”),
AND:
…………………………… [company legal name] whose registered office is at ……………………………….
[address, city and country] and registration/fiscal number is ……………………………………………….
represented by ……………………………………………………. [name and surname, position]
(hereinafter, referred to as the “Buyer”),
The Parties, of their own free will, state that they have and mutually recognise each other’s legal
capacity to be bound under the terms of this International Agreement, for which they will be
jointly referred to as “the Parties”,
RECITALS
- Whereas the core business of the Seller is ……………………………………….. [indicate]
- Whereas the core business of the Buyer is………………………………… [indicate].
III. Whereas the Seller is the owner of the Know-How and of the technical, scientific and
commercial activity concerning ……………………………………. [indicate procedure].
- Whereas the Buyer is interested in obtaining the right to use said Know–How and to
benefit from the necessary technical assistance.
In light of the foregoing, the Parties have agreed to enter into this International Know-How
Agreement (hereinafter referred to as “the Agreement”) subject to the following
CLAUSES
- OBJECT
1.1 By virtue of this Agreement, the Seller assigns to the Buyer the right to use the formulas,
raw materials, materials, components and procedures for the manufacture of the
Product…………………… (indicate) detailed in Annex I of this Agreement (hereinafter “the KnowHow”),
Subject to the terms and conditions set forth in the following clauses.
- TECHNICAL ASSISTANCE
2.1 The Seller, as the owner of the Know-How, as detailed in the Document attached hereto
as Annex II to this Agreement, undertakes to provide the Buyer with all the necessary support
and technical assistance for the manufacture of the Product and to transfer all the experience
and knowledge that may be of interest to the Buyer.
2.2 The technical assistance provided by the Seller shall not only include technical advice
but also any advice which might be useful, such as commercial advice. Hence, the assistance will
consist of the following elements:
……………………………………………………………………………………………………………………………………..……………
………………………………………………………………………………………………………………………………………..…………
………………………………………………………………………………………………………………………………..…………………
[Include the list of elements to be included in the assistance, such as analysis of the possibilities
of expansion of the business activity or new business, methods for the selection of new materials
or products, analysis of quality control, staff training, etc.]
Some Tips
DATE
The date when the contract comes into force is the one that appears in its header, as mentioned
in the final paragraphs of the contract, before signatures (This Contract comes into force on the
date written above).
In some contracts -for example in the Supply Contract- the date of coming into force is also
mentioned in one of the clauses. In these cases you have to verify that the two dates inserted in
the contract (in the heading and in the corresponding clause) are the same, in order to avoid
discrepancies.
PARTIES
Be sure to insert in the first page of the contract the full details of the Parties:
When a Party is a company you must insert the following information: legal name, legal form
(limited, incorporated, etc.), full address, registration data and fiscal identification number.
When a Party is an individual that works as independent professional (for example a
commercial agent) you must insert the following information: full name, profession, full
address and fiscal identification number.
CLAUSES
Clauses with different alternatives: choose the most favorable
In the most important clauses of each contract (exclusivity, payment terms, applicable law and
competent jurisdiction, etc.) several drafting alternatives are proposed so you can choose the
most appropriate to each situation. Therefore, the user before submitting the contract to the
other Party must choose the alternatives that seem best suited to their interests, and eliminate
the rest.
Clauses with blank spaces to be completed
In several clauses of the contract blank spaces appear with dots (…………………..) that the user
has to complete inserting text. Following the dots, between brackets, you will see the data and
explanations to insert the text.
When the text between brackets is in normal letters (the same as the contract) and
separated by “,” or the word “o”, the user must insert one of the options suggested.
Example of blank space (……..) with options to select between brackets:
Orders handled before completion of the present Contract which produce sales transactions
within ………. [1, 2, 3, 6] months shall entitle the Agent to receive the corresponding commission.
In this case the user must choose between options 1, 2, 3 or 6 months and insert one in the blank
space (……..).
When the text between brackets is in italics the user has to insert the data and information
requested and eliminate the bracketed text.
Example of blank space – (………) to insert text:
Both parties, by mutual consent, resolve to refer any dispute to the Rules of Conciliation and
Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in
accordance with said Rules. The place of arbitration shall be ……….. [city and country]. In this
case the user must insert in the blank space (………..) the city and country chosen to conduct the
arbitration and afterwards eliminate the bracketed text [city and country].
Notices Clause
Sometimes it may happen that the official address of the Parties which appear at the beginning
of the contract is different from which is to be used for communications between the Parties
during the terms of the contract. In this case the user should include at the end of the contract
a Notices Clause.
Example of Notices Clause:
Notices. – In order to comply with their contractual obligations, the Parties establish the
following address for the provision of notices related to this contract:
– Party 1 ……………………………………………………. [insert full address].
– Party 2 ……………………………………………………. [insert full address].
ANNEXES
The contracts incorporate some Annexes, each of them, referenced to the corresponding Clause.
Annexes are drafted in commonly used formats, although the user must adapt these formats
and the text inserted in them to each particular situation.
SIGNATURES
People who sign
Persons signing the contract on behalf of the company must have the authority to do so and
preferably, be entitled on the basis of a power of attorney. Below the signature, in addition to
the full name of the person that signs his/her position must be inserted. When one of the Parties
who signs is a natural person (for example a commercial agent in an Agency Contract) obviously
he or she is the person that has to sign the contract.
The laws of some countries require that contracts, to be valid, shall be signed in front of
witnesses or a public notary. Therefore, before signing a contract you should be informed about
the requirements that may exist in each country.
Place and date of signature
Usually contracts are signed by both Parties on the same date and place. Nevertheless, in
international contracts, due to physical distance, it is common that each of the Parties sign in
different dates and places. This contract provides for both alternatives so it comes to choosing
the most appropriate to each situation.
Number of copies
Usually, the Parties sign two copies of the contract, each Party retaining one of them, but can
also arise the need to sign more copies. In this case all you have to do is mention explicitly the
number of copies to be signed in the paragraph that is included at the end of the contract (Both
Parties declare their conformity to the present contract, which is signed in …… copies, each of
which shall be considered an original).
GENERAL RECOMMENDATIONS
The Parties must sign all pages of the contract, including Annexes, so they are also valid. It is
better to use ball point or pen (not pencil) in a color other than black (e.g.: blue); this makes it
easier to distinguish an original document from a photocopy.
It is preferable (although no mandatory) to express sums of money and percentages in words
and figures. Of course, the words and figures for a given amount must match exactly. You also
must insert the currency in which the amounts are expressed. It is advisable to use the rules
establish by ISO that name each currency by three capital letters (EUR for euro, USD for dollar,
GBP for sterling pound, JPY for Japanese yen, etc. – you can get the acronyms of every currency
in the website www.oanda.com).