Chapter IX

VOLUNTARY LICENSING

Sec. 85. Voluntary License Contract

       To encourage the transfer and dissemination of technology, prevent or control practices and conditions that may in particular cases constitute an abuse of intellectual property rights having an adverse effect on competition and trade, all technology transfer arrangements shall comply with the provisions of this Chapter. (n) 

Sec. 86. Jurisdiction to Settle Disputes on Royalties

       The Director of the Documentation, Information and Technology Transfer Bureau shall exercise quasi-judicial jurisdiction in the settlement of disputes between parties to a technology transfer arrangement arising from technology transfer payments, including the fixing of appropriate amount or rate of royalty. (n) 

Sec. 87. Prohibited Clauses

       Except in cases under Section 91, the following provisions shall be deemed prima facie to have an adverse on competition and trade: 

       87.1. Those which impose upon the licensee the obligation to acquire from a specific source capital goods, intermediate products, raw materials, and other technologies, or of permanently employing personnel indicated by the licensor; 

       87.2. Those pursuant to which the licensor reserves the right to fix the sale or resale prices of the products manufactured on the basis of the license; 

       87.3. Those that contain restrictions regarding the volume and structure of production; 

       87.4 Those that prohibit the use of competitive technologies in a non-exclusive technology transfer agreement; 

       87.5. Those that establish a full or partial purchase option in favor of the licensor; 

       87.6. Those that obligate the licensee to transfer for free to the licensor the inventions or improvements that may be obtained through the use of the licensed technology; 

       87.7. Those that require payment of royalties to the owners of patents for patents which are not used; 

       87.8. Those that prohibit the licensee to export the licensed product unless justified for the protection of the legitimate interest of the licensor such as exports to countries where exclusive licenses to manufacture and/or distribute the licensed product(s) have already been granted; 

       87.9. Those which restrict the use of the technology supplied after the expiration of the technology transfer arrangement, except in cases of early termination of the technology transfer arrangement due to reason(s) attributable to the licensee; 

       87.10. Those which require payments for patents and other industrial property rights after their expiration, termination arrangement; 

       87.11. Those which require that the technology recipient shall not contest the validity of any of the patents of the technology supplier; 

       87.12. Those which restrict the research and development activities of the licensee designed to absorb and adapt the transferred technology to local conditions or to initiate research and development programs in connection with new products, processes or equipment; 

       87.13. Those which prevent the licensee from adapting the imported technology to local conditions, or introducing innovation to it, as long as it does not impair the quality standards prescribed by the licensor; 

       87.14. Those which exempt the licensor for liability for non-fulfillment of his responsibilities under the technology transfer arrangement and/or liability arising from third party suits brought about by the use of the licensed product or the licensed technology; and 

       87.15. Other clauses with equivalent effects. (Sec. 33-C(2), RA 165a) 

Sec. 88. Mandatory Provisions

       The following provisions shall be included in voluntary license contracts: 

       88.1. That the laws of the Philippines shall govern the interpretation of the same and in the event of litigation, the venue shall be the proper court in the place where the licensee has its principal office; 

       88.2. Continued access to improvements in techniques and processes related to the technology shall be made available during the period of the technology transfer arrangement; 

       88.3. In the event the technology transfer arrangement shall provide for arbitration, the Procedure of Arbitration of the Arbitration Law of the Philippines or the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL) or the Rules of Conciliation and Arbitration of the International Chamber of Commerce (ICC) shall apply and the venue of arbitration shall be the Philippines or any neutral country; and 

       88.4. The Philippine taxes on all payments relating to the technology transfer arrangement shall be borne by the licensor. (n) 

SEC. 89. Rights of Licensor

       In the absence of any provision to the contrary in the technology transfer arrangement, the grant of a license shall not prevent the licensor from granting further licenses to third person nor from exploiting the subject matter of the technology transfer arrangement himself. (Sec. 33-B, R.A. 165a) 

SEC. 90. Rights of Licensee

       The licensee shall be entitled to exploit the subject matter of the technology transfer arrangement during the whole term of the technology transfer arrangement. (Sec. 33-C (1), R.A. 165a) 

SEC. 91. Exceptional Cases

       In exceptional or meritorious cases where substantial benefits will accrue to the economy, such as high technology content, increase in foreign exchange earnings, employment generation, regional dispersal of industries and/or substitution with or use of local raw materials, or in the case of Board of Investments, registered companies with pioneer status, exemption from any of the above requirements may be allowed by the Documentation, Information and Technology Transfer Bureau after evaluation thereof on a case by case basis. (n) 

SEC. 92. Non-Registration with the Documentation, Information and Technology Transfer Bureau

       Technology transfer arrangements that conform with the provisions of Sections 86 and 87 need not be registered with the Documentation, Information and Technology Transfer Bureau. Non-conformance with any of the provisions of Sections 87 and 88, however, shall automatically render the technology transfer arrangement unenforceable, unless said technology transfer arrangement is approved and registered with the Documentation, Information and Technology Transfer Bureau under the provisions of Section 91 on exceptional cases. (n)