Features of the global technology market

The world technology market is a system of economic relations in the field of exchange of scientific and technical knowledge, which can be presented both in materialized and non-materialized form.

The subjects of the world technology market are government agencies, research institutes and educational institutions, industrial companies and small innovative firms, as well as individuals – scientists and specialists.

The main agents in the international technology market are TNCs, because only the largest companies can afford large R&D costs, especially since the introduction of modern, usually technically complex innovations requires large capital investments. TNCs, as the main agent of technology exchange, own more than 4/5 of patents for new technology. At the same time, at least 1/3 of the world’s technological exchange falls on the intra-company transfer of TNK technology, which is used by them to penetrate new markets or to establish their own subsidiaries.

The objects of the world technology market are the results of intellectual activity in materialized (various units, equipment, tools, technological lines, etc.) and non-materialized (information, various kinds of technical documentation, knowledge, production experience) forms.

The global technology market has a specific regulatory framework for its operation – the International Code of Conduct on Technology Transfer; and international regulatory bodies such as the World Trade Organization Agreement on Aspects of Intellectual Property Rights (TRIPS), the Committee on Transfer of Technology of the United Nations Conference on Trade and Development (UNCTAD), the World Intellectual Property Organization (WIPO), the Coordinating Committee on Export Controls (COCOM), the Meeting of Security and Technology Specialists (STEM).

There are the following segments of the world technology market:

market of patents and licenses; market of high-tech technological products; high-tech capital market; market of scientific and technical specialists.

The main form of international exchange of scientific and technological achievements is licensed trade, the subject of which is patent and non-patent (know-how) licenses for the transfer of inventions, technological experience, industrial secrets and commercial knowledge, for the use of trademarks, etc.

Licensing trade, covering transactions with know-how and patents for inventions, is the main form of commercial technology transfer. In modern conditions, the vast majority of license trade falls on the sale of free licenses. This is due to savings on additional R&D and implementation costs. Therefore, the most common in the international transfer are license agreements providing for a comprehensive technological exchange with the provision of know-how and engineering services for the industrial implementation of the transferred technology. The second place is occupied by licenses for know-how and only the third – purely patent licenses that do not provide for the transfer of know-how. This is explained, in particular, by the fact that at the current level of technological development, the development of most inventions without providing know-how, i.e. experience and knowledge that the selling company has, is either impossible at all or leads to unproductive costs of time and money. Know-how is therefore the main focus not only of licences but also of other forms of technology transfer.

The leading branches of licensed trade are electrical engineering and electronics, general engineering, chemistry and petrochemistry, transport engineering, textile and food industries. The trade in licenses in the field of electrical engineering and electronics is developing at a particularly high rate.

A license is a permission of the seller (licensor) to use by another person – the buyer (licensee) – inventions, technological knowledge, technology, production experience, production secrets, trademarks that are necessary for the production of commercial and other products for a certain period (an average of 5-7 years) for a stipulated remuneration.

A distinction is made between patent licenses, i.e. granting the right to use a patented invention, and free (know-how) licenses that give the right to use scientific and technical achievements.

In world practice, license agreements are most often used, providing for the comprehensive transfer of several patents and related know-how.

Patent – a document issued by a state body to an inventor, certifying his authorship and exclusive right to use the invention. According to UN experts, buyers pay for purchased licenses
1-10% of the value of the sold products produced on the basis of license agreements. Patenting promotes protection against “piracy” and unfair competition. Piracy is especially prevalent in the software market, as well as in the use of trade names and trademarks. In Brazil, “ghost companies” specialize in registering well-known trademarks in order to negotiate with their rightful owners and profit from them. A total of 6,000 signs were registered in this way (Suzuki, Renault, etc.).

According to the scope of the rights transferred to the licensee, there are:

a simple license, under the contract of which the licensor authorizes the use of the invention, reserving the right to both independent use and sale of similar licenses to third parties (common in the field of mass production and wide consumption); an exclusive license, under the contract of which the licensee is granted exclusive rights to use the invention within the limits stipulated in the agreement, and the licensor can no longer issue similar under the terms of the license to other persons, but reserves the right to independently use the license (typical for non-serial goods); full license: the licensor cedes all rights to use the scientific and technical achievement during the term of the agreement and refuses to use the license independently (rarely used).

For granting the right to use the subject of the license agreement, the licensee pays the licensor a license fee.

Forms of payment of license fees:

royalties – a stipulated participation in profits, i.e. periodic deduction from the income of the buyer during the entire period of the license agreement. 90% of all royalties are paid in the form of royalties; lump sum payment – a one-time payment, not related in time to the use of the license, but established in advance on the basis of expert assessments (usually for countries with unstable economies and unfamiliar partners); combined payments – include the initial amount in the form of a lump sum payment (usually 10-15% of the total license price) and subsequent periodic deductions (royalties).

According to the category of subject of the transaction, licenses for scientific and technical knowledge (inventions and know-how), industrial designs, trademarks and various types of services are distinguished.

Know-how – providing technical experience and production secrets, including information of a technological, economic, administrative, financial nature, the use of which provides certain competitive advantages. The legislation of many countries defines know-how as organizational or commercial information constituting a production secret.

Industrial design is an artistic or artistic-design solution that determines the appearance of the product. An industrial design is granted legal protection.

A trademark is a designation that distinguishes the goods and services of some persons and firms from homogeneous goods of other persons or firms. A trademark can be declared invalid if it is illegally registered or by the passage of time the grounds for further maintaining its state protection, for example, it has entered into general use as a designation of a certain kind of product. This almost happened with the trademarks Aspirin, Rank Xerox.

A type of international trade in licenses is franchising. Franchising is a system for transferring or selling technology and trademark licenses. The seller (franchisor) not only transfers to the buyer (franchisee) the right to use the trademark, but also provides him with constant assistance in doing business. This assistance is expressed in the provision of technical services, training and advanced training of personnel, management of the enterprise for a fee, etc.

Essentially, the seller and the buyer in this case act as a vertically integrated firm, whose branches are interconnected and produce part of the goods and services for the consumer. This is especially true for complex franchising, which provides for the full provision of the dealer, including marketing, management of the operation of the enterprise, standards and quality control of products.

Advantages of franchising:

the preservation of the franchisee’s status as a legal entity and the right of ownership of the property owned by him, even with the actual transformation of this previously independent enterprise into a kind of subsidiary of a well-known company; the possibility of a small company receiving support from the franchisor when applying for a loan to the bank or in case of temporary difficulties in settlements with creditors (the franchisor can act as a guarantor); the use of the image of a company that has already gained credibility among customers guarantees quick recognition among customers; guaranteed assistance in management, marketing, research and development; free mutual support by advertising and assistance to each other in the supply of raw materials and components, spare parts, sales of finished products.