Technology Transfer Contracts and the TRIPS: Interpreting High and Low Consensus Norms

Abstract

China’s rules and practices in relation to technology transfer have been of long-standing concern to its trading partners. These concerns are most strongly evident in the United States Trade Representative’s section 301 Report which foreshadowed the imposition of substantial increased tariffs on Chinese goods; a move which was quickly mirrored by China. This article subjects some of these concerns to legal scrutiny. Particular attention is given to China’s treatment of grantback clauses in technology transfer contracts which speak to the ownership of improvements made to \licensed technology. China’s outgoing and recently revised rules are evaluated under two questions. The first is whether China’s rules are discriminatory contrary to the Trade-Related Aspects of Intellectual Property Rights (TRIPS) national treatment obligation. The second is the extent to which states are free under the TRIPS to interfere with freedom of contract in technology transfer. The article identifies a shift as between the two questions from high consensus, to low consensus norms. While the prohibition on discrimination must be strictly interpreted and applied, other TRIPS provisions which touch upon the control of anti-competitive practices in technology licensing, do not remotely reflect a stable international consensus. Interpretations of these provisions should therefore seek to accommodate different approaches, rather than presume that they reflect and prioritize one approach to the exclusion of others. technology transfer, technology licensing, grantback clauses, TRIPS, national treatment