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Philippine Intellectual Property Brief


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RULES AND REGULATIONS ON
VOLUNTARY LICENSING
FULL TEXT
 

 
RULES AND REGULATIONS 
ON VOLUNTARY LICENSING

WHEREAS, the State recognizes that an effective intellectual and industrial property system is vital to the development of domestic creativity, facilitates transfer of technology, attracts foreign investments and ensures market access for our products;  

WHEREAS, the State recognizes that the use of intellectual property bears a social function and to this end, the State shall promote the diffusion of knowledge and information for the promotion of national development and progress and the common good;  

WHEREAS, it is the policy of the State to liberalize the registration of the transfer of technology and enhance the enforcement of intellectual property rights in the Philippines;  

WHEREAS, there is a need to encourage the transfer 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;  

NOW, THEREFORE, pursuant to the provisions of Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines, the following rules and regulations on voluntary licensing are hereby promulgated:  

 

PART 1 
DEFINITIONS


Rule 1. Definition of terms.  Unless otherwise specified, the following terms shall have the meaning provided in this Rule:  

(a) “Amendatory Agreement” means an agreement that  amends any of the terms and conditions of the agreement;  

(b) “Bureau” means the Documentation, Information and Technology Transfer Bureau of the Intellectual Property Office;  

(c) “Computer software developed for mass market” means computer software that:  

    (i) is produced, made and marketed for a broad range of purposes and users including end-users and commercial users;  

    (ii) is sold over the counter or via standard delivery mechanisms;  

    (iii) involves payments that are not based on royalty;  

    (iv) generally provides for an indefinite term for the use of the software; and  

    (v) does not need any customization by the supplier or distributor. 

(d) “Director” means the Director of the Documentation, Information and Technology Transfer Bureau;  

(e) “Director General” means the head of the Intellectual Property Office;  

(f) “Intellectual Property Rights” means:  

    1. Copyright and Related Rights;  

    2. Trademarks and Service Marks;  

    3. Geographic Indications;  

    4. Industrial Designs;  

    5. Patents;  

    6. Layout-Designs (Topographies) of Integrated  Circuits; and  

    7. Protection of Undisclosed Information 

(g) “IP Code” means Republic Act No. 8293 otherwise known as the Intellectual Property Code of the Philippines;  

(h) “IPO  Gazette”  means the Intellectual Property Office’s own publication where all matters required to be published under the IP Code shall be published;  

(i) “Mandatory Provisions” means provisions that shall be included in voluntary license contracts as provided in Section 88 of the IP Code and reproduced in rule 3 of these Regulations;  

(j) “Office” means the Intellectual Property Office;  

(k) “Prohibited Clauses” means provisions in Technology Transfer Arrangements that are deemed prima facie to have an adverse effect on competition and trade as provided in Section 87 of the IP Code and reproduced in Rule 2 of these Regulations;  

(l) “Regulations” means this set of rules and regulations and such rules and regulations as may be formulated by the Director of the Documentation, Information and Technology Transfer Bureau and approved by the Director General;  

(m) “Renewal Agreement” means any agreement that  extends the term of an agreement registered with the Office or with the former Technology Transfer Registry of the former Bureau of Patents, Trademarks and Technology Transfer, without any amendment or other modification of any other provision of the previously registered agreement;  

(n) “Technology Transfer Arrangements” shall mean contracts or agreements involving the transfer of systematic knowledge for the manufacture of a product, the application of a process, or rendering of a service including management contracts; and the transfer, assignment or licensing of all forms of intellectual property rights, including licensing of computer software except computer software developed for mass market  

The licensing of copyright is considered a technology transfer arrangement only if it involves the transfer of systematic knowledge.  

(o) “Undisclosed  Information” shall mean information which:  

    (i)  is  secret  in  the  sense  that  it  is  not,  as  a  body  or  in  the  precise  configuration  and  assembly  of  its  components,  generally  known  among  or readily  accessible  to  persons  within  the  circles  that  normally  deal  with  the  kind  of  information  in  question;  

    (ii)  has  commercial  value  because  it  is  secret;  and  

    (iii) has  been  subject  to  reasonable  steps  under  the    circumstances to keep it secret, by  the  person  lawfully  in  control  of  the  information. 


Rule 2.  Prohibited  clauses.  Pursuant to Section 87 of the IP Code, the  following  provisions  and other clauses with equivalent effect shall  be  deemed  prima  facie  to  have  an  adverse  effect  on  competition  and  trade:  
    (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;  

    (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;  

    (3) Those  that  contain  restrictions  regarding  the  volume  and  structure  of  production;  

    (4) Those  that  prohibit  the use  of  competitive  technologies  in  a   non-exclusive  technology   transfer  arrangement;  

    (5) Those  that  establish  a  full  or  partial  purchase  option  in  favor  of  the  licensor;  

    (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;  

    (7) Those  that  require  payment  of  royalties  to  the  owners  of  patents  for  patents  which  are  not  used;  

    (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;  

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

    (10) Those  which  require  payments  for  patents  and  other  industrial  property  rights  after  their  expiration or  termination of the technology transfer arrangement;  

    (11) Those  which  require  that  the  technology  recipient  shall  not  contest  the  validity  of  any  patents  of  the  technology  supplier;  

    (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;  

    (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;  

    (14) Those  which  exempt  the  licensor  from  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. 


Rule 3.  Mandatory  provisions.  Pursuant to Section 88 of the IP Code, the  following  provisions  shall  be  included  in  voluntary  license  contracts: 

(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;  

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

(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  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  

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

 

PART 2 
REGISTRATION OF EXEMPT TECHNOLOGY TRANSFER ARRANGEMENTS


Rule 4. Application for exemption. A sworn  application for exemption from any of the Prohibited Clauses and/or Mandatory Provisions of the IP Code may be filed with the Director stating the exemption/s being requested,  the  justification for the exemption/s, and that the agreement is not subject of any judicial, administrative or other proceeding.  

 The application must be accompanied by a copy of the  agreement, payment of the appropriate fee/s, and other documents that may be required by the Bureau to support and establish the merits of the request.  

 The applicant may submit either a draft or a duly executed  and notarized agreement.  


Rule 5. Who may file.  Any party to a technology transfer arrangement or his duly authorized representative may file an application for exemption with the Director.  


Rule 6.  When to file.  The application shall be filed in accordance with the following schedule:  

    (a)  New Agreements  -  within  thirty  (30)   days  from  the  date  of  execution  or  effectivity,  whichever  is  earlier;  

    (b) Renewal  Agreements -  anytime prior to the  expiration  of  the  term  of  the  existing  technology  transfer  agreement;  and  

    (c) Amendatory  Agreements -  within  thirty (30)  days  from  the date of effectivity of such  amendment  or  modification. 


Rule 7.  Filing date.   The date on which the applicant complies with the requirements of the Bureau is the Filing Date  which shall be duly recorded in the Filing Date Entry Book.  The Bureau shall issue to the applicant a  Notice  of  Filing Date which is also the date when  evaluation  of  the  request  shall  commence.  


Rule 8.  Notice  of  additional  requirements.  Should  the Bureau find that the  documents  submitted are incomplete or insufficient, the Bureau shall  issue  a  notice  to  the  applicant,  within  six (6)  days  from  the  Filing  Date,  requiring the applicant  to  submit  the  additional  documents.  Failure  of  the  applicant  to  comply  with  any  of  the  requirements  within  a  period  of  fifteen (15)  days  from  the  date  of receipt  of  the  notice  shall  be  construed  as  an  abandonment  of  the  application without prejudice to refiling as a new application.  Should the  applicant  require  additional  time to  comply with  the  requirements,  a  final  extension  of  fifteen (15)  days  will  be  granted  upon  payment of  the  required  fee.  


Rule 9.  Scope of evaluation. Requests for exemption shall be evaluated based on the adverse effects of the terms and  conditions of the technology transfer arrangement on   competition and trade.  Exemption from the Prohibited Clauses and Mandatory Provisions of the IP Code will be granted in exceptional  or  meritorious  cases where substantial benefits will accrue to the economy, such as:  

    (a) high  technology  content;  

    (b) increase  in  foreign  exchange  earnings;  

    (c)  employment  generation;  

    (d) regional  dispersal  of  industries;  

    (e) substitution  with  or   use  of  local  raw  materials;  

    (f) pioneer status registration with the  Board  of  Investments. 


Rule 10.  Acceptable worldwide industry standards and practices. As part of the evaluation procedure for requests for exemptions, the Bureau shall take into account acceptable worldwide industry standards and practices for licensing technology in the relevant sectors.  

Rule 11.  Recognition of valid intellectual property rights. In the assessment of requests for exemptions involving clauses which restrict the use of the technology supplied after the expiration of the technology transfer arrangement under Section 87.9 of the IP Code, the Bureau shall take into consideration the protection of valid patent, copyright, trademark, trade secret or other intellectual property rights subsisting even after  the termination or expiration of the technology transfer arrangement.  


Rule 12.  Payment of taxes.  In the evaluation of requests for exemption involving provisions which do not require the licensor to pay Philippine taxes on all payments relating to the technology transfer arrangement under section 88.4 of the IP Code [Rule 3 (4) of these Regulations], the Bureau shall take into consideration current laws, rules and regulations issued by the Bureau of Internal Revenue regarding the  liability for payment of such taxes.  

Rule 13.  Decision.  The Bureau shall decide whether or not to grant the application within thirty-five (35) days from the Filing Date.  


Rule 14.  Issuance  of  certificate.  The Bureau shall  issue  the  Certificate  of  Registration  within  two (2)  days  from approval of the application.  

If  a  draft  agreement  was  submitted for  evaluation, the  Certificate  of  Registration shall be issued two (2) days after the submission   of  the  duly  executed  agreement  provided it  shall  not  contain  any  amendment or any modification not  authorized  by  the  Bureau.  


Rule 15.  Certificate  registry  book.   After  the  issuance  of  the  Certificate  of  Registration,  the  title  of  the  technology  transfer  arrangement  and  parties  thereto,  its  registration  number  and  the  date  of  registration  shall  be  entered  in  the  Certificate Registry  Book.  


Rule 16.  Cancellation  of  registration.  Automatic  cancellation  of  registration  shall  be made  upon  receipt  of  a  duplicate original or certified  copy  of  the  registered  technology transfer arrangement  containing amendments or modifications that  violate  the   Prohibited Clauses and Mandatory Provisions of the IP Code without approval of the Bureau.  

The Bureau may  also  cancel  the  registration  of  the  technology  transfer  arrangement  if, after evaluation, the Bureau has established that the justification for the grant of an exemption submitted by the applicant does not exist or has ceased to exist.  Such action will be made only after the parties in whose names the Certificate of Registration was issued are given an opportunity to be heard.  

In both cases, the parties shall be required to surrender the Certificate of Registration  provided that the surrender of the Certificate  shall not be a pre-requisite to the  cancellation of  the registration.  
 
PART 3 
SUMMARY PROCEDURES 


CHAPTER 1.  TRADEMARK  LICENSE  AGREEMENT   


Rule 17. Clearance prior to recordal with the Office.   Prior to its recordal, any  trademark  license  agreement  covered by  Section 150.1  and Section 150.2  of  the  IP  Code   shall  be  filed  with  the Bureau for  clearance together with the proof of payment of the filing fee.  


Rule 18.  Evaluation period.  Within  a  period  of ten  (10)  days,  the Bureau shall  determine  whether  such  agreement  violates  any  of Prohibited Clauses or Mandatory  the Provisions of  the  IP  Code.  
  

Rule 19.   Certificate of clearance.  If  an  agreement submitted  for clearance does not violate any of the Prohibited Clauses or Mandatory Provisions of  the  IP  Code,  the Bureau shall  issue  a  certificate  of  clearance  and the  agreement shall be recorded by the appropriate officer in the Office.  


Rule 20.  Notice to comply.  Should  any  provision  of  the  agreement  violate any of the Prohibited Clauses or Mandatory Provisions of  the  IP Code,  the Bureau shall  issue  a  notice  to  the  parties  in  the  agreement  informing  them  of  the  violation and requiring  them  to  comply  with pertinent provision of the IP Code prior to recordal.  
  

CHAPTER 2. CERTIFICATE  OF  COMPLIANCE  AND  APPROVAL FOR LEGAL  PURPOSES.   


Rule 21.   Request for certification of compliance.  The  parties  to  a  technology  transfer  arrangement  may  jointly  file  a  request for  a  certification  to  the  effect  that  the  technology  transfer  arrangement  conforms  with the Prohibited Clauses and Mandatory Provisions  of  the  IP Code.  The  request  shall  be under oath, filed in duplicate, state the purpose of  the  certification, and state that the agreement is not subject of any judicial, administrative or other proceeding.  It shall be accompanied by a duplicate original copy of the  duly executed and notarized agreement, payment of the required fees, and other documents that will be required by the Bureau to support    and establish the merit of the request.  


Rule 22.  Evaluation period; action on the request.  The Bureau shall  conduct  a  summary  evaluation  of  the  technology  transfer  arrangement  within ten  (10)   days  from  filing.  If  the  technology  transfer  arrangement  conforms   with  the Prohibited Clauses and Mandatory Provisions of  the  IP Code,  the Bureau shall  issue  a   Certificate  of  Compliance.  Otherwise, the Bureau shall give the parties a notice informing them of the violation and requiring them to comply with the IP Code if they wish to obtain a Certificate of Compliance.  
  

CHAPTER 3.  PRELIMINARY REVIEW AND/OR PRE-CLEARANCE OF TECHNOLOGY TRANSFER ARRANGEMENTS.   
Rule 23.  Request for preliminary review.  Any party to a technology transfer arrangement may file a request for a preliminary review of a  draft technology transfer arrangement to determine conformance with the Prohibited Clauses and Mandatory Provisions of the IP Code.  
  

Rule 24.  Evaluation period.  The Bureau shall conduct a summary evaluation of the draft technology transfer arrangement within ten (10)  days from filing of the application and  upon payment of the required fees.  
  

Rule 25.  Notice of findings.  The Bureau shall issue a  notice of its findings on the draft technology transfer arrangement as submitted.  
  

Rule 26.  Submission of the agreement under Part 2.  After the completion of the foregoing summary procedure, the technology transfer arrangement may be submitted for registration under Part 2 of these Regulations.  

PART 4 
RECONSIDERATION AND APPEAL


Rule 27. Requests for reconsideration. Requests for  reconsideration of all actions or decisions rendered by the Director shall  be  filed in writing stating clearly and concisely the reasons therefor and shall, whenever relevant, be accompanied by supporting documents.  The request shall be filed with the Director within fifteen (15) days from receipt of the decision and shall be accompanied with proof of  payment of the required fee. The Director  shall  render  final  decision  within  thirty-five (35)  days  from  the  date  of  filing  of  the  request in accordance with this Section.  


Rule 28.  Appeal  to  the  Director General.  Appeal from a decision of the Director shall be filed with the Office of the Director General in writing stating clearly and concisely the reasons therefor and shall, whenever relevant, be accompanied by supporting documents.  The appeal to the Office of the Director General shall be made within fifteen (15) days from appellant’s receipt of the decision of the Director and shall be accompanied with proof of payment of the required fee.  


Rule 29.  Appeal  to  the  Secretary  of  Trade  and  Industry.  A decision or final order of the Director General shall be final and executory unless  an appeal is filed with the Secretary of Trade and Industry   within  fifteen (15)  days  from  appellant’s receipt  of  the  decision.  

PART 5 
MISCELLANEOUS PROVISIONS


Rule 30.   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  persons  nor  from  exploiting  the  subject  matter  of  the  technology  transfer  arrangement  himself.  
  

Rule 31.     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.  
  

Rule 32.  Technology transfer agreements subject of judicial proceedings. The Bureau shall  not  take  cognizance  of any  request for exemption, clearance for legal purposes, and/or recordal of trademark license agreement where  the  validity, enforceability, or any issue involving such  technology  transfer  arrangement  has  become the subject of  a judicial proceeding.  
  

Rule 33.    Publications.  The Bureau shall  cause  to  be  published  in  the  IPO  Gazette  all  registered  technology  transfer  agreements.  The  publication  shall  contain   the  names  of  the  parties,  title  and  subject of  the  agreement,  and  specific  exemption/s  granted, if any.  


Rule 34.  Office forms. For the convenience of applicants, the Office shall draw up and make available a standard application form, and such other forms as may be necessary or useful, which may be reproduced at will by applicants and other persons at their own cost.  
  

Rule 35.  Coverage.  These rules and regulations shall apply to:  

(a) all applications, requests, exemption, and clearance prior to recordal of a trademark license agreement covering new, renewal or amendatory technology transfer arrangements filed on or after January 1, 1998 regardless of the date of execution or date of effectivity;  

(b) all agreements extending the life of technology transfer agreements with subsisting registration under the Rules of the Technology Transfer Registry of the Bureau of Patents, Trademarks and Technology Transfer. Minor changes, such as change in licensor/licensee,  addition/deletion of products, among others, affecting technology transfer agreements with subsisting registration under the Rules of Practice of the Technology Transfer Registry of the Bureau of Patents and Technology Transfer may be submitted to the Bureau for notation purposes.


FINAL PROVISIONS


Section 1.  Implementation. In the interest of the service, until the organization of the Bureau is completed, the functions necessary to implement these Regulations shall be performed by the personnel of the former Bureau of Patents, Trademarks, and Technology Transfer as may be designated by the Director General upon the recommendation of the Chief of the Technology Transfer Registry of the Bureau of Patents Trademarks and Technology Transfer heretofore designated as Officer-in-Charge or Caretaker of the Documentation Information and Technology Transfer Bureau.  


Section 2. Fees and charges to be prepaid; fees and charges payable in advance.  Express charges, freight, postage, telephone, telefacsimile including cost of paper and other related expenses, and all other charges on any matter sent to the Office must be prepaid in full. Otherwise, the Office shall not receive nor perform any action on such matters.The filing fees and all other fees and charges payable to the Office shall be collected in advance of any service to be rendered.  
  

Section 3.  Repeal.  All rules and regulations, memoranda, circulars and memorandum circulars and parts thereof inconsistent with these Regulations particularly the Rules of Practice of the Technology Transfer Registry of the Bureau of Patents, Trademarks and Technology Transfer [BPTTT], as amended, are hereby repealed.  


Section 4.  Separability. If any provision in these Regulations or application of such provision to any circumstance is held invalid,  the remainder of these Regulations shall not be affected thereby.  


Section 5.  Effectivity. These rules and regulations shall take effect fifteen (15) days after publication in a newspaper of general circulation.  

 Done this      day of           1998.  
  
EMMA C. FRANCISCO  
     Director General  


 


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