Guide for use in drawing up contracts relating to the international transfer of know-how in the engineering industry

Topic	Licensing (patent, trademark and know-how)
Source	United Nations Economic Commission for Europe Palais des Nations Genève , Switzerland 1211
Telephone	(41-22) 917 4444
Fax	(41-22) 917 0036
Web	http://www.unece.org/welcomef.htm
Email	info.ece@unece.org

Please note: The contracts and guides contained in the present collection have been selected for illustrative purposes only. Juris International shall not be liable for their contents or use.

I. Introduction

A. Purpose

1. The present Guide is intended to facilitate the drawing up of contracts relating to the international transfer of know-how in the engineering industry. Such contracts are becoming of ever-increasing importance in international dealings and help to promote an international diffusion of technical knowledge.

B. Subject

2. The main object of the Guide is to draw attention to certain problems peculiar to this type of contract and to serve as a basis for solutions that take account of the interests of both parties so as to reduce the likelihood of disputes arising from the execution of contracts.

C. Precautions

3. (i) A main theme of the Guide is the need for the parties to such contracts to draw them up with the utmost care so as to make clear their respective rights and obligations. This precaution which, in any contract, may prevent later difficulties is especially advisable because the subject matter here is in a state of flux.

(ii) For the same reason, it should be understood that this Guide will not absolve negotiators from the need to take timely expert legal advice.

II. General considerations concerning know-how and its transfer

A. Definition and characteristics of know-how

4. (i) Many definitions of know-how have been given¹. According to the circumstances know-how can consist, for a given product or category of products, of the whole or part of the technical information needed for designing, manufacturing, using, maintaining or possibly marketing the product or products or some elements thereof, or for any combination of these operations; in the case of techniques or processes, know-how can consist of the whole or part of technical information needed for designing and using them.

(ii) Know-how is an economic asset for the exploitation of which, however, its possessor must have some scientific or technical ability.

B. Technical means

5. (i) The technical information which constitutes know-how may comprise, according to circumstances:

(a) Items : samples, unregistered designs, machines, apparatus, spare parts, tools, special accessories, etc.;

(b) Technical documents: formulae, calculations, plans, drawings, unpatented inventions, etc.;

(c) Instructions : notes concerning the design, manufacture or use of the product or process, shop practices or practical advice on execution, technical recipes, explanations supplementing a patent, data on the organization of work: requirements in regard to buildings, layout of plant, production routing and inspection methods, qualifications of personnel and data helpful economically, such as costing data, etc.

[See paras. 37 and 38: Supply of the technical means.]

(ii) Know-how agreements may also cover patented inventions and registered designs (see paras. 7 (ii) and 62 to 66).

C. Legal protection

6. (i) Unlike a patented invention, know-how does not yet enjoy any special legal protection, national or international; it is neither registered nor published. If the know-how is disclosed it cannot be protected as a patent would be by a legal instrument. In the event of its illicit disclosure, however, its possessor may, without prejudice to any contractual remedies, have recourse to such protection as the applicable ordinary law may provide: damages and possibly an injunction against unfair competition, penal sanctions, etc. (see also para. 11 (iv)).

(ii) As long as a patentable invention is not patented, it can only be treated as know-how, which does not preclude a later application for a patent, subject always to the relevant national laws on patents.

D. Knew-how and patents

7. The reasons for which know-how is not patented are numerous:

(i) First of all the invention is not always patentable (inventive element insufficient; domain excluded by the law, etc.);

(ii) The know-how may be subsequent to the patent; the experience acquired through the industrial exploitation of a patent may give rise to complementary know-how which can or cannot be patented;

(iii) Finally, know-how may be a substitute for a patent when secrecy is preferred to security.

[The problem of know-how connected with patents is dealt with in paras. 62 to 66 and 78.]

E. Elements of secrecy

8. (i) Know-how normally consists of a number of elements of which at least one or, failing that, a combination of elements, is of a secret nature. This secrecy adds to the economic value of the know-how and gives a special juridical character to its transfer. The secret is not necessarily permanent, nor is it necessarily the prerogative of a single possessor. Nevertheless, in so far as there is a secret, and so long as it is not disclosed, each of its possessors enjoys an advantage over his competitors - an advantage that the possessor is all the more concerned to exploit because it is temporary.

(ii) The present Guide deals directly or indirectly with the consequences of secrecy on the obligations of the parties in the following paragraphs:

	Paragraphs
Special risks involved in the transfer	11
Further risks	14
Preliminary negotiations	15 to 22 (chap. III)
Duration of obligations of the parties	25
Public-policy provisions	26 (ii)
Preservation of secrecy: grantor's obligations	44
Exchange of know-how	53 (ii)
Preservation of secrecy: grantee's obligations	54
Effect of the accidental loss of secrecy	55
Communication of improvements	59 to 61
Liability for disclosure of secret information	82
Effect of the expiry of the contract	88 (iii)

(iii) It may also happen that the know-how has no element of secrecy, but that its transfer represents a saving of time and money for a possible grantee. (The terms "grantor" and "grantee" have no precise legal significance, but correspond to current usage.).

F. Transfer of know-how

9. The contract for the transfer of know-how

The know-how contract lays down the terms and conditions upon which the know-how is transferred from the grantor to the grantee².

10. Parties' interest in the transfer

The grantee in a contract for the transfer of know-how usually wishes to acquire more rapidly than would be possible by trial and error technical information which he does not possess. Usually he expects to obtain some return from the know-how and to achieve certain quality standards. The main desire of the grantor in transferring his know-how is to get something in exchange, usually of a pecuniary nature. Sometimes he may also wish to co-operate with the grantee in industrial or commercial operations.

11. Special risks

(i) The transfer of know-how involves more complex problems for the two parties than those generally connected with patent or copyright transfer or licence agreements;

(ii) The grantor may fear that if the secret is divulged by the grantee or by his staff, he will not have any satisfactory redress; in addition, he may hesitate to accede to the grantee's request that he should guarantee the results of the application of a process which the grantee may not be fully equipped to carry out;

(iii) The grantee, who generally wishes to use the know-how in order to equal or surpass his competitors in the technical field, may fear that the secret already is in, or sooner or later may come into, their possession, or he may fear being unable to obtain the desired results; in other words, he has no sure basis for assessing an advantage whose duration and scope are unknown to him;

(iv) These problems inherent in the transfer of know-how at the national level are compounded at the international level, in addition to the absence of specific provisions in international conventions on the protection of know-how, by the almost general absence of special legislation in national laws to which the transfer and disclosure of know-how are subject and where such legislation exists, by its extreme diversity.

12. Choice of contracting partner - Mutual confidence

Because of these uncertainties, the parties should choose their contracting partners with the utmost care. This precaution is all the more justified in that a contract of know-how requires a high degree of mutual confidence and good faith.

13. Contract intuitu personae

In view of the fact that mutual confidence between the parties as well as their identity are fundamental elements in any contract of know-how, it is sometimes provided that they may terminate it if the parties change their identity or effective control (by amalgamations, mergers, etc.).

14. Further risks

(i) Even assuming perfect good faith between the parties, a know-how contract always carries a series of particular risks of which the parties ought to take account.

(ii) Irreversible effect of transfer

Once in possession of the know-how, the grantee will not be able to forget it or to return it in its entirety to the grantor. [Paragraph 32 which deals with these limitations should be read with this reservation particularly in mind.]

(iii) Time factor

Furthermore the time during which know-how retains its value is uncertain and the parties should take account of the possibility that, as a result of rapid technological development, know-how may become public knowledge and lose its value within a short time (see para. 55).

III. Preliminary negotiations

A. Problem of secrecy

15. Preliminary negotiations for the conclusion of a know-how contract obviously touch upon the nature, the scope and the duration of the services to be rendered by the parties and upon the authorizations that have to be obtained beforehand. In that respect, they are not an exception to the rule concerning pre-negotiations for the conclusion of contracts for the international supply of goods.

16. Difficulties involved

In the case of transfer of know-how in particular, these pre-negotiations are in addition generally concerned with the problem of secrecy; they are particularly delicate because the possessor of the know-how will want to give the possible grantee sufficient information to interest him in the transaction, while avoiding giving him particulars that will enable him to get what he wants without having to conclude a contract.

17. Precautions to be taken by the grantor

The grantor's representatives must be careful not to disclose the secret inadvertently during the discussions, or even to give information that may provide a clue to it. This precaution is particularly to be recommended when the negotiators engage experts conversant with the latest advances in the field.

18. Description of results obtained

(i) One solution the parties can adopt for the problem of maintaining secrecy during the preliminary negotiations is to give no confidential information on the secret elements of the know-how, but only to describe the results obtained, the determination of the content of the know-how being left perhaps to the findings of a joint inspection to be conducted in the grantor's works after the conclusion of the contract;

(ii) This method is not always suitable, however, since the grantor may not wish his know-how to be the subject of inspection in his own works. In addition, the grantee, although believing that he will receive the know-how in its entirety, may be left ignorant of the nature of the means which it comprises and hence will be unable to assess the price asked by the grantor.

19. Preliminary written agreement

(i) In most cases the grantor will not divulge any secret information during the preliminary negotiations. He will, however, sometimes agree to give a potential grantee information that does not reveal the essential secrets of the know-how but is nevertheless of a confidential nature.

(ii) In this case, the parties may sometimes conclude a preliminary written agreement in which the potential grantee undertakes not to communicate, divulge or use, unless and until a contract is concluded, information of a confidential nature that he may obtain during the preliminary negotiations.

(iii) This preliminary agreement may refer to a fixed sum to be paid by the grantee, in case of a breach, although according to some national applicable laws, its payment may not always be enforceable.

(iv) Sometimes this preliminary agreement also includes an arbitration clause, to allow the parties to settle by arbitration any conflict resulting from its execution or from its interpretation (see para. 90).

20. Value of the undertaking

(i) If the potential grantee commits a breach of this undertaking, the grantor may apply to the courts or to the arbitrators for damages on the strength of this written agreement;

(ii) The grantor should not, however, attach too much value to this document, for it may be difficult for a court or for the arbitrators to assess the damages which ought to be awarded;

(iii) In any case, in a know-how contract or in any contract, the weight which the court or the arbitrators will give to an undertaking of this kind will depend essentially on the provisions of the applicable law and the related case law, as will also the protection given to the grantor in the absence of any such undertaking (see para. 89).

21. Prior payment of a sum of money

(i) It may be that the possessor is insufficiently informed about the other party's reputation, technical competence, solvency, etc. In this case, before divulging information of a confidential nature, he might require a deposit that would serve as security for the agreement not to use the confidential information.

(ii) On the conclusion of a contract, this deposit would be deducted from the payment to be made by the grantee.

(iii) If no contract were concluded, it would be necessary to provide how the sum is to be disposed of: the deposit might be lost to the grantee without allowing him to disclose the confidential information; or it could be refunded to him immediately, or after some delay, either wholly or in part.

(iv) The difficulty with this course, however, is that a small sum would not constitute adequate security, while a large one might deter a potential grantee who had not made up his mind to conclude the contract.

22. Exchange of knew-how, technical assistance, etc.

In practice, the difficulties inherent in the preliminary negotiations may be reduced when the transaction is part of an exchange of know-how or when the transfer of know-how is an adjunct to technical assistance³ (see para. 39) furnished to the grantee, or even to an important sale of plant.

IV. Drafting of the contract⁴

A. Subject-matter of the contract

23. The negotiators must take care to draft their contract in precise and unambiguous terms and above all to define exactly the know-how which is the subject-matter of the contract, so that the number of constructions that can subsequently be placed on the obligations of the parties are reduced to the minimum and, in the event of a dispute, the judge or arbitrator can base his search for a solution mainly on the clearly expressed intention of the parties.

B. Preamble

24. Before the description of the parties' obligations, many contracts contain a preamble⁵ defining the intentions of the parties, the purpose and scope of the know-how, the means comprised in it and the nature of the contract. This information may provide a supplementary source of interpretation of the parties' obligations in the event of a dispute. Reference is sometimes made to the grantor's industrial property rights and applications in the country of the grantee (see paras. 62 to 66).

C. Duration of obligations of the parties

25. If one or other of the parties - or both of them - should undertake to perform obligations spread over a period of time, they often mention in the contract the period during which each of the obligations is to be performed. This precaution is justified because the transfer of know-how may be combined with other transactions, the legal effects of which are of different duration; it helps also to avoid disputes, if the secret loses its importance after a certain time.

D. Public-policy provisions of applicable law

26. The parties should remember that the law they have chosen (see para. 86) and the laws applicable in the territories involved in the contract (territory of the grantor, of the grantee, of the execution of the contract, etc.) may contain mandatory provisions of public policy which have the effect of restricting their freedom of contract and the ignorance of which would be detrimental to them. These provisions in particular refer to:

(i) Necessary governmental authorizations (exchange control, import and export licences, etc.);

(ii) Regulations which may stand in the way of preserving the secrecy of the information transferred, or may empower the State to use the information or to transfer it to third parties;

(iii) Provisions relating to third-party claims (see para. 67);

(iv) The system of taxation (see para. 68);

(v) Provisions concerning restrictive business practices (see para. 69);

(vi) The procedure for the settlement of disputes, etc. (see paras. 72 and 90);

(vii) Provisions relating to remedies (see paras. 18 and 73).

E. Languages - Equivalence

27. (i) When the contract is drafted in several languages, the parties specify which of the texts is or are authentic (see para. 91);

(ii) It should provide for translations of documents and instructions comprised in the know-how and if need be for reservations about these translations (see para. 38 (ii) and (iii));

(iii) Sometimes provision is made for a table of equivalents between systems of units used in the grantor's and the grantee's countries (see para. 38 (iv)).

V. Terms and conditions of the contract

28. To avoid ambiguity, the contract usually stipulates in detail the terms and conditions governing the transfer of know-how: kinds of transfer, scope of the exploitation of the know-how, exclusive rights, etc.

A. Kinds of transfer

29. There are so many kinds of know-how contract, and the criteria used for their classification and reduction to a few types are so numerous, that any attempt in that direction may only conceal the complexity of the subject.

30. Once-for-all or continuous transfer

(i) Nevertheless experience shows that these contracts can usefully be classified in three particular categories, based on the time and duration of the transfer.

(ii) The first category comprises contracts covering the transfer of know-how relating to a particular product or process as it is at the time of the contract, through simple procedures such as the transfer of documents, the establishment of a list of machines with their characteristics, a visit to works or factories with the authorization to make notes or take photographs, etc. In this case the grantee makes such use as he thinks fit of the information so obtained.

(iii) The second category is a variant of the first. The know-how transferred is limited to a particular product or process as it is at the time of the contract, but the transfer takes place by a number of complex and successive procedures whose duration and phases are specified in the contract; the grantor, for example, undertakes the installation and adjustments of the devices or processes of manufacture.

(iv) The third category comprises contracts covering the transfer - sometimes reciprocal - of know-how relating to a technical field and to all products and processes which will successively be part of it during a period of time defined in the contract, including sometimes the improvements which may be made by the parties.

31. Main or ancillary transaction

(i) If the transfer of know-how is independent of any other commercial transaction, it may be called a "pure" know-how transfer;

(ii) If, on the contrary, it is ancillary to a sale of equipment, to a patent licence, to the granting of the right to use a trade mark, or to other transactions, it is a combined know-how transfer;

(iii) In this case, the transfer of know-how is dealt with in separate clauses or even in a separate contract, since the obligations of the parties produce different effects in respect of the different transactions, particularly as regards their duration;

(iv) Sometimes know-how ancillary to an important commercial transaction is transferred without additional payment.

B. Scope of exploitation of the knew-how

32. (i) Territory

The contract should lay down the restrictions - or the limitations - set on the exploitation of the know-how by the grantee and in particular the territorial limits of its use.

(ii) Operations

Except when specifically otherwise provided, the exploitation of the know-how usually includes the manufacture and the sale of the product. Sometimes indications are given on sub-licences (see para. 70).

(iii) Industrial application

The contract may also limit the grantee's right to use the know-how to a particular branch of industrial activity or to a certain type of production.

(iv) Duration

Although the transfer of know-how is irreversible (see para. 14), the contract may provide that the grantee's right to exploit the know-how will be for a limited period. In this case the means whereby the know-how was communicated, including all copies, may be returned to the grantor on the expiry of the contract. This procedure is justified when the contract is brought prematurely to an end, for example by termination (see para. 81 (ii)).

(v) All these limitations may take a positive or a negative form and should be defined precisely and completely.

(vi) Other conditions

The contract sometimes specifies other conditions relating to the scope of exploitation of the know-how by the grantee; it may, for example, fix a price for the sale of the product manufactured with the help of the know-how, make it conditional upon the purchase of goods, etc.

33. Reservations

(i) The parties should keep in mind that the limitations mentioned in paragraph 32 above are sometimes difficult to enforce in view of the irreversible effect of the transfer of know-how and of the difficulty of proving breaches, sometimes unintentional, of these limitations (see para. 14);

(ii) It may also happen that these limitations are subject to authorization or are forbidden by the provisions on restrictive business practices of the national or international applicable law (see para. 69).

C. Exclusive rights

34. (i) The know-how is transferred to the grantee on an exclusive basis when, under the terms of the contract, the grantor gives up the right both to exploit it himself and to let it be exploited by a third party in the territory and for the duration provided in the contract;⁶

(ii) When the parties wish to limit these exclusive rights by allowing the grantor himself to exploit the know-how in the territory where it is granted, they should specify this in the contract;

(iii) On the other hand, the contract may merely give the grantee the right to exploit the know-how on the terms agreed, while the grantor retains the right to exploit it as well, or even to dispose of it as he pleases, provided he does so without prejudice to the rights of the grantee as laid down in the contract;

(iv) A number of variants and intermediate situations are described below (see para. 43).

VI. Obligations of the grantor

35. Enumeration

The grantor must of course undertake to transmit the technical information that constitutes the know-how. He may also offer certain guarantees of results and, according to circumstances, supply technical assistance, grant exclusive rights and subscribe to other ancillary undertakings, which should be specified.

A. Supply of the technical means

36. Terms and conditions

The contract should lay down the terms and conditions under which the means allowing the grantee to come into possession of the know-how are transmitted, including the place, time or date at which the transfer is to be carried out.

37. Technical items and documents

When the know-how includes, among other things, technical items and documents, the contract should specify the mode of transport of the articles in question, the place and the time-limits for delivery, the passing of risks, the consequences of delays, what spare parts, if any, are to be furnished, the grounds of exemption from liability, etc., all these provisions being of the kind usually contained in contracts for the supply of goods. If, among the technical materials to be transmitted, machines and heavy equipment are included, their supply is sometimes the subject of a special arrangement.

38. Instructions

(i) Instructions, practical advice and explanations can be transmitted by means of a simple visit by the grantee or his representatives to the grantor's works. The contract should specify, in this case, the terms and conditions of this visit: date, duration, visiting staff and staff placed at their disposal, explanations on the spot and in documents, on the utilization of the know-how, and so on.

(ii) The transmission of instructions may also consist in the training of the grantee's staff, in the grantor's or grantee's works, by the grantor's staff. The contract should also cover the terms and conditions of such training and in particular the language in which instructions are to be given and any interpretation required.

(iii) Instructions are sometimes assembled in a manual supplied to the grantee by the grantor. When the grantee asks for a translation of the manual and the grantor cannot provide it himself, the grantor may make reservations designed to exclude or to limit his liability in this respect.

(iv) If the dimensions referred to in the instructions are given in a system of units which does not correspond with that used in the grantee's country, it may be useful, or even necessary, to establish an equivalence between the two systems. The grantor may also find it necessary to make reservations regarding the equivalence when the accuracy of the dimensions is an essential item of the know-how.

B. Technical assistance to the grantee's staff

39. If the know-how relates to a highly specialized field in which the grantee is comparatively inexperienced, the parties sometimes agree that the grantor will train the grantee's staff in the methods of utilizing the know-how. To this end, the contract should specify the terms and conditions of such assistance: the place where it is to be given (grantor's or grantee's works); the date and period for which assistance is envisaged; the number of trainees and instructors; the qualifications of the latter; terms of training in relation to the operation of the works where the training is to be given; measures to prevent leakage of confidential information; working conditions, accommodation, transport and insurance for the staff concerned, payment of the instructors, terms and conditions of payment, etc.

C. Guarantee of results

40. Terms and conditions

Sometimes the contract provides for a guarantee by the grantor of the results to be obtained by the grantee; sometimes the contract refers only to an authorization by the grantor to the grantee to ascertain the results already obtained with the use of the know-how.

41. Ascertainment of results obtained by the grantor

(i) The contract may provide that the know-how is already being used with certain results by the grantor, by one of his associates or by one of his customers and that the grantee may verify this by paying a visit or carrying out technical tests;

(ii) In this case the contract should specify the terms and conditions of such visits or tests: place and date at which they are to be carried out; staff authorized to participate, number of such visits or tests, conditions of security, etc.;

(iii) Sometimes periods of time are laid down within which the grantor can correct any defects which may have appeared during these tests.

42. Guarantee of results to be obtained by the grantee

(i) When the grantor guarantees the results to be obtained by the grantee with the use of the know-how, the contract should not merely give a vague or ambiguous definition of the guarantee. In view of the importance of the obligation, and the consequences that its nonobservance would entail, it should specify the terms and conditions of this guarantee and the requirements necessary for its fulfilment.

(ii) The contract should lay down the technical parameters of the results to be achieved: quality standards of the product, quantities to be produced, minimum or normal performance, particular dimensions, permitted tolerances, etc.

(iii) The requirements for bringing the guarantee into play should also be listed in detail; they may range from the quality of the raw materials, the choice and siting of any relevant equipment, working conditions, etc., to such external factors as temperature and humidity.

(iv) The grantor usually undertakes to assist the grantee in obtaining the results which have been guaranteed including when difficulties arise the necessary technical assistance.

(v) In addition the contract should specify the conditions of the tests, which take place at the grantee's works, the adjustments which are necessary and the period allowed for such adjustments, the taking over and the final acceptance. If the contract is silent on the point, the final acceptance will generally exonerate the grantor from his liability with regard to the guarantee.

(vi) Remedies for the case when the results are not obtained by the grantee are mentioned in paragraphs 76 and 77.

D. Exclusive and non-exclusive rights

43. (i) There is no presumption of the grant of exclusive rights. Therefore if the parties wish to provide for such rights, a clause to that effect must be included in the contract specifying whether or not the grantor retains the right for himself to exploit the know-how.

(ii) The grant of exclusive rights to exploit the know-how is usually subject to territorial limitations; if, however, the grantor grants to the grantee exclusive rights within certain countries or territories, he may also grant him non-exclusive rights in other countries or territories.

(iii) The grant of exclusive rights may also be restricted to certain transactions or to a particular branch of industry.

Example No. 1: the grantor may grant the grantee exclusive rights of exploitation of the know-how for manufacture and sale in a particular country, and exclusive rights for sale alone in another country;

Example No. 2: the grantee may obtain exclusive rights to exploit the know-how in certain countries for the manufacture of any product whatsoever with the help of the know-how, and non-exclusive rights in all other countries for the manufacture, with the help of the know-how, of some products only.

(iv) Exclusive rights granted in one territory for a particular operation in a given branch of industry, may further be limited by a stipulation to the effect that the grantor reserves the right:

(a) To exploit the know-how within the same territory, for the same purpose or for a different purpose;

(b) To transfer it to a second grantee within the same territory but for a different purpose.

This may happen for example when the grantee uses the goods manufactured with the help of the know-how for the production of his own articles, but the grantor wishes those goods to be sold independently, perhaps even with his own trade mark on them.

(v) Sometimes the grantor undertakes to furnish the grantee, upon his request, with the names of the other grantees and the territories in which they operate and to give him "most-favoured-grantee" treatment.

E. Preservation of secrecy

44. Although the obligation to preserve the secrecy of the know-how lies essentially with the grantee, it may be in the grantee's interest, as soon as he is capable of exploiting the know-how, and particularly when he has been granted exclusive rights, that the grantor should also preserve the secrecy. Furthermore, whenever the contract involves similar reciprocal obligations - exchange of know-how, exchange of improvements - the grantor may be made subject to the same obligations as the grantee to preserve the secrecy of what he receives. For this reason the contract sometimes lays down expressly the obligation of the grantor to preserve the secrecy of what he supplies or of what he may subsequently receive in exchange, as well as the duration of that obligation.

F. Additional information

45. Title to dispose of the know-how

(i) The contract may indicate the legal basis on which the grantor is able to dispose of the know-how (e.g. as creator or licencee) or similarly it may say what steps, if any, have been taken by him which might lead to legal limitations on the use of the know-how by the grantee.

(ii) For example, the grantor may already have transferred to third parties exclusive know-how licences or industrial property rights which overlap with the operations or with the scope of industrial exploitation envisaged in the contract providing for the exploitation of the know-how by the grantee. Such situations may arise when the grantor has made agreements with third parties relating to the continuing exchange of know-how.

(iii) It is of the utmost importance that in concluding the contract the grantor does not inadvertently undertake to grant more than he possesses or will possess in order not to leave the grantee with the impression that he will receive more than the grantor is entitled to give him.

46. Economic value

(i) The contract sometimes specifies the technical and economic value of the know-how;

(ii) For example, if the grantor is firmly convinced that, at the time of the conclusion of the contract, he possesses all the latest knowledge in the particular field, the contract may say that the know-how transferred is at the level of the most recent technical developments in that field;

(iii) In other cases, it may be said that the know-how is at the highest level known to the grantor, or simply, that it is that used by him.

VII. Obligations of the grantee

47. Enumeration

Normally, the main obligation of the grantee is to make a payment for the know-how he receives, although the know-how may be transferred without additional payment when it is complementary to other commercial transactions. Secondly, if an element of secrecy is involved in the know-how, the grantee undertakes to maintain that secrecy. The grantee may also sign agreements to exploit the know-how; he may undertake to maintain the quality of the products manufactured with the help of the know-how, or he may accept ancillary obligations.

A. Payment

48. Methods

Payments may be made in cash or in goods; payment may also consist of an exchange of know-how. In addition to provisions concerning payment for know-how, the contract may take account of payments in respect of transactions between grantor and grantee related to the know-how, such as the supply of certain goods, technical assistance, etc.

49. In cash

(i) If payment is to be made in cash, the parties usually specify the place and method of payment and the currency in which it will be made; they should also take into account all questions that may arise relating to convertibility, exchange control, the rate of exchange, reference to gold or other standards, taxation, etc.;

(ii) Cash payments include lump-sum payments and variable royalties, the amount of which is related to the exploitation of the know-how. Payment may be made by a combination of these two methods: a lump-sum payment at the time of the conclusion of the contract and royalties when the know-how is being exploited.

50. Lump-sum payments

(i) Lump sums may include the payment of a single lump sum or of instalments laid down in advance, at a fixed rate or at an increasing or decreasing rate;

(ii) The contract may specify the terms and conditions of these lump-sum payments and in particular the date or time at which they are made;

(iii) In view of the fact that these payments are clearly defined and sometimes made prior to the grantor's obligations or to some of these, the grantee will take particular care that the grantor's obligations are clearly specified in the contract.

51. Royalties

(i) When the grantee is paying royalties, provision may be made for the grantor to be given an opportunity of having the grantee's results verified, so that he can assess the royalty due. In particular, the grantee's records showing the number of articles produced and sold are in some cases made available to the grantor.

(ii) The contract may, in order to establish this relationship between royalties and result, refer to the turnover in the product manufactured with the aid of the know-how, to the selling price, or to the volume of production. The term "turnover" ought to be defined, its meaning not being the same in all countries; so ought the amounts that may be deducted from the turnover or from the gross selling price on account of discounts granted or of other deductible items. In this connexion, reference may also be made to the payment in the grantee's country of tax on the turnover in, or on the transfer of, the products manufactured.

(iii) Sometimes the contract stipulates the payment of a minimum or of a maximum royalty, irrespective of the results obtained. Instead of minimum and maximum royalties or in addition to them, a scale of royalties more than proportional or less than proportional to the results may also be used.

(iv) The contract may also specify:

(a) The time at which royalties are due: for example, when the product for which the know-how was necessary has been manufactured;

(b) The date for the payment of royalties: when the goods manufactured with the know-how are delivered to a customer; when the customer makes his payment; at the end of the year; or within specified periods of time following these events, etc.

52. Payments in goods or in services

Cash payments are sometimes replaced partially or totally by payments in goods or in services.

53. Exchange of know-how

(i) The grantee may also fulfil his obligations by supplying the grantor with other technical knowledge; this type of contract, which is normally concluded between undertakings which have reached more or less the same technical level or between complementary undertakings, may be hazardous and its duration indefinite. When, however, it serves as the starting point for a continuous exchange of know-how, as yet undiscovered, it may result in a high degree of technical co-operation, and even of partnership, between enterprises. It is sometimes accompanied by joint technical research.

(ii) The parties to this exchange of know-how should be careful, when they subsequently conclude agreements with third parties for the transfer of know-how in the same or related fields, not to disclose secrets which they will have obtained through this exchange. In that respect, problems resulting from the exchange of know-how are somewhat similar to those

connected with the reciprocal communication of improvements (see chap. VIII: Other obligations, para. 61).

B. Preservation of secrecy

54. Essential element. (See para. 8 (ii) referring to all the paragraphs of the Guide dealing with the problem of secrecy.)

(i) The grantee's obligation to preserve the secret communicated by the grantor may be an essential element in the contract; in this case, the contract will contain a provision under which the grantee undertakes not to disclose or communicate to third parties information, specifically identified as being secret, received in connexion with the transfer of know-how;

(ii) The grantee also undertakes, in this case, to take appropriate steps to ensure that the secret part of the know-how is not disclosed by his staff or by his associates;

(iii) If the parties wish to make an exception to this fundamental provision - in the case of sub-licence or sub-contract, for example - they should specifically make reference to this exception in the contract.

C. Effect of the accidental loss of secrecy

55. (i) The contract sometimes provides for the possibility of the secret character of the know-how - where secrecy is an essential element of the know-how - being lost before the expiry of the contract, without the fault of either party;

(ii) The parties should specify the consequences that this situation may bring about with regard inter alia to the obligation to preserve secrecy, to payments to be made by the grantee, to the obligation to exploit (when such obligation is specified) and possibly to the expiry of the contract;

(iii) As far as payments are concerned, the solution may differ for lump-sum payments, instalments or royalties; for instalments the solution may be influenced also by applicable legislation on restrictive business practices;

(iv) The contract may stipulate that it may be terminated when secrecy is not only an essential element but the very basis of the contract.

D. Obligation to exploit

56. (i) When payment consists of royalties, the contract usually specifies the obligation of the grantee to exploit the know-how during the period laid down for the payment of royalties and to reach a minimum output and a specified quality standard;

(ii) The grantee, however, will be careful not to commit himself in this way except within the limits of profitable production and provided the know-how is not made obsolete by a new invention during the currency of the contract or by the loss of its secret character.

E. Maintenance of quality

57. (i) Under a contract for the transfer of know-how, the grantee may be permitted or obliged to sell the product under the grantor's trade mark. In certain cases, the grantor may authorize the grantee to utilize his own trade mark.

(ii) Sometimes the parties provide that the product made by the grantee is not to carry the grantor's trade mark but an indication of the use that has been made of the grantor's know-how transferred by the grantor.

(iii) References to the grantor's trade mark will oblige the grantee to reach and to maintain the quality standards of the product.

(iv) The contract should specify how the grantor will ensure that the grantee fulfils his obligations: quality inspections of the grantee's products with the possibility of the subsequent prohibition of the sale, under the grantor's trade mark, of goods which are below standard or simply verification that the indication of the use of the grantor's know-how does not give rise to misunderstanding or affect his technical reputation.

(v) Sometimes the contract provides for its termination by the grantor, if the grantee does not reach the required standard within the specified time-limits (see chap. IX).

(vi) Since the granting of the right to use trade marks is governed by binding legal provisions which the parties cannot evade, the grantee's obligations in that respect should be mentioned separately in the contract.

VIII. Other obligations

58. Enumeration

The transfer of know-how may also, like anycommercial transaction, give rise to a number of complementary obligations for either or both of the parties such as: communication of improvements, patents connected with the know-how, civil liability in case of third-party claims, taxes, legal provisions on restrictive business practices, the granting of sub-licences, etc.

A. Communication of improvements

59. Terms and conditions

(i) In view of the rapidity of technical progress, the parties to a contract for the transfer of know-how can expect improvements to be made in it in a relatively short period of time. Consequently, in case of cooperation between the parties, the contract sometimes stipulates that any improvements and modifications made to the know-how by one of the parties will be communicated to the other on terms to be specified as regards price, if any (sometimes improvements are communicated without additional payment), the duration of the obligation (normally the duration of the contract) and the secrecy of the improvements.

(ii) If the improvement has been made by a third party who has assigned it to one of the parties, its transfer to the other party may require the permission of the said third party and the payment to him of a sum to be decided on by agreement between those concerned.

(iii) If the grantor transfers the know-how to a number of grantees, the contract may provide that the parties shall benefit, through the grantor, from any improvements that may be made to the know-how by either the grantor or the grantees.

60. Radical modification of manufacture

(i) A difficulty may arise when the improvement or modification introduced into the know-how by one of the parties is such that it radically alters the manufacture and constitutes, in fact, new know-how which should not obligatorily be transferred. The contract should provide to what extent and under what conditions the modification should be communicated, the parties keeping in mind that it is very difficult to lay down a dividing line between improvements which must be communicated and those which need not.

(ii) If the parties allow for an exception to be made to the obligation of communication, as far as radical modifications are concerned, they sometimes agree nevertheless to a priority right to be offered to the other party.

(iii) When the contract does not provide for an exception to the rule as to communication, it sometimes refers to an amicable procedure with a view to establishing an adequate remuneration.

(iv) Sometimes no exception is made to the obligation to communicate and no provision is made in respect of additional remuneration.

61. Similar contracts with third parties

(i) The reciprocal communication of improvements in the know-how may also create difficulties for the parties with respect to maintenance of secrecy where one or both of them is connected with other firms through the transfer of know-how in related fields involving the communication of improvements. It may well be, in fact, that an improvement made in a given item of know-how may be applied, as it stands or with slight modification, to a related item of know-how; consequently, the obligation on the party to whom such an improvement is communicated to keep it secret conflicts with that party's obligation, Yis-à-vis a contracting partner with respect to a related item of know-how, to communicate all improvements to the latter.

(ii) Indications are sometimes given on how to deal with these borderline cases, which really belong to the sphere of co-operation between firms. The contract sometimes provides - usually in case of the granting of exclusive rights - that the grantee has no right to conclude similar agreements in the same field with other firms (see also para. 53: Exchange of know-how).

B. Patents connected with the know-how

62. Precautions to be taken in preparing the contract.

It is in the interest of both parties to take account of any obstacles or advantages which may be derived from prior or subsequent patents connected with the know-how (whether the patent belongs to the grantor, to the grantee, or to a third party). The parties should therefore be careful to specify in the contract the obligations they are prepared to assume should any of these situations arise.

63. Grantor's prior patent

(i) If the know-how relates to the industrial exploitation of a prior patent belonging to the grantor, it is particularly advisable that the patent licence and the transfer of the know-how should - according to the importance of each element - be dealt with in separate clauses, or even in separate contracts, if the purpose, duration and relevant rules of law differ in the two cases. Similar considerations would apply to other forms of industrial property rights.

(ii) If the know-how has been patented by the grantor in a country or in a territory other than the one in which the grantee has obtained the right of exploitation, the grantee may:

(a) Ask for a licence enabling him to export the know-how to countries where it has been patented;

(b) Stipulate that the patent will not prevent him from exploiting his know-how in case of a subsequent patent being taken by the grantor in the grantee's country or in any third country to which the know-how contract relates;

64. Subsequent patents held by the parties

(i) The contract usually contains provisions regulating the disposition of rights in patents subsequently obtained for:

(a) The know-how itself (or any of its elements) existing at the date of the contract and owned by the grantor;

(b) Later improvements made by either the grantor or the grantee.

(ii) There will normally be a provision in the contract that the grantor will inform the grantee of his intention to apply for a patent relating to the know-how (or any of its elements) existing at the date of the contract. In this case the contract usually provides that the grantee is entitled to a licence under the patent, within the scope of the contract, without further payment to the grantor.

(iii) The contract may also provide that, with the grantor's previous authorization, the grantee himself may apply, in the territories covered by the contract, for patents in respect of know-how (or any of its elements) existing at the date of the contract, and in such a case the contract will normally specify the conditions under which the patents are to be governed.

(iv) In the case of improvements made by either party the contract usually specifies which of the parties is to file patent applications, the territories in which patent applications may be filed and the conditions under which such patents are to be governed (at whose expense; nature of rights granted by one party to the other, any rights to be accorded to third parties; any further payments by one party to the other, etc.).

(v) The contract may also provide for co-operation between the parties in proceeding against a third party for infringement of a patent held by the grantor or the grantee or in conducting a joint defence to a suit brought by a third party against one of them (see also para. 78).

(vi) The contract normally states whether the rights granted under (ii), (iii) or (iv) above survive the termination of the contract, with or without modification. (It is important to avoid the situation where the party making the invention is hindered in his exploitation of the patent after the termination of the contract.)

(vii) The contract may contain similar provisions in respect of other forms of industrial property rights.

(a) Ask for a licence enabling him to export the know-how to countries where it has been patented;

64. Subsequent patents held by the parties

(i) The contract usually contains provisions regulating the disposition of rights in patents subsequently obtained for:

(a) The know-how itself (or any of its elements) existing at the date of the contract and owned by the grantor;

(b) Later improvements made by either the grantor or the grantee.

(vii) The contract may contain similar provisions in respect of other forms of industrial property rights.

65. Prior third-party patents

(i) The industrial exploitation of the know-how may constitute a breach of third-party patent rights;

(ii) It is usually the grantee who finds out what the situation is in his territory as regards patents; nevertheless, in some cases, he will be unable to make this search until he has obtained the know-how;

(iii) The contract is therefore sometimes made subject to a condition suspending its operation for a specified period to enable the grantee to search for prior patents;

(iv) The parties may also undertake a joint search for prior patents in the technical field related to the know-how;

(v) On the other hand the grantor may expressly state in the contract that he has no knowledge of the existence of any relevant patents but that he is unable to give any undertaking in that respect.

66. Subsequent third-party patents

(i) Another situation that may arise is that a third party may obtain a patent after the contract is concluded, with the result that the grantee - and even the grantor - may be wholly or partly prevented from exploiting the know-how as soon as the patent can be used as a basis for objections. Since of all situations which the existence of a patent may cause, this one cannot be avoided a priori, it is in the interests of the parties to make provision for the effects which that situation may have on their contract.

(ii) They may decide, for example, on a provision to the effect that payment will be stopped or reduced (when the grantee has to pay the third party for a patent licence), or perhaps even that the contract will be terminated. The problem is the same in cases where, at the time when the third-party patent comes into play, payment has been completed (see also para. 78).

(iii) The parties may also agree to co-operate in protecting the know-how and, if need be, in challenging the validity of a patent applied for or obtained by a third party.

C. Civil liability in the event of third-party claims

67. (i) Third parties may sue the grantee or the grantor for personal injury or damage to property sustained through the use of the know-how or of the products manufactured with its help.

(ii) It is therefore in the interest of the parties to say:

(a) Which party is to accept liability; or

(b) How the liabilities are to be apportioned; or

(iii) In choosing one of the solutions referred to in the proceeding sub-paragraph, the parties should bear in mind both the cost of insuring against civil liability and the provisions of the applicable law.

(iv) In any case the parties should specify how they will keep each other informed on this matter.

D. Taxation

68. (i) The parties often specify in the contract by whom taxes will be borne or in what proportion they will share them. They should, in this connexion, bear in mind the relevant legislation applicable and any international double-taxation agreements which may exist between the countries concerned and should make the necessary adjustments.

(ii) Seeking the advice of experts on this subject is particularly to be recommended.

E. Restrictive business practices

69. (i) The parties should remember that national or international applicable legislation designed to prohibit restrictive business practices may invalidate or limit some of the provisions which they might wish to include in their transfer of know-how.

(ii) The provisions are inter alia those which:

(a) Limit the exploitation of the know-how (see para. 32);

(b) Prohibit the manufacture or sale of some articles;

(d) Make the transfer of know-how conditional on other commercial operations (see para. 31 (iv));

(e) Provide for payments or for an obligation to exploit after the know-how has lost its value (see para. 55 (iii) and 56), etc.

(iii) As on fiscal problems, the parties are advised to consult experts on these matters.

F. Sub-licences

70. (i) To avoid any misunderstanding and for the reasons explained on the irreversible effects of the transfer (see para. 14), the contract should specify whether or not the grantee is to have the right to transfer the know-how to a third party for exploitation within the territorial or other limits assigned to him;

(ii) In the absence of any specific provision to that effect, this right to grant a sub-licence cannot be presumed;

(iii) If under the contract, sub-licences are to be permitted, the contract generally specifies the terms and conditions on which they may be granted, including an obligation upon the grantee to inform the grantor and possibly to obtain any necessary authorizations.

IX. Remedies for non-performance by the parties of their obligations

A. Faulty drafting of the contract

71. Where there is the necessary degree of mutual confidence between the parties and a pursuit of common interests, the apparent failure of one or other party to fulfil his obligations is in the majority of cases due to obscure or faulty drafting of the contract. Attention has already been drawn to the importance of setting out the terms of the contract completely and clearly.

B. Amicable settlement

72. Where a failure appears to have occurred, the parties can generally reach a satisfactory settlement by remedying the relevant flaw or flaws in the contract and without recourse to legal remedies.

C. Contractual remedies

73. (i) Nevertheless circumstances do arise when the party injured by the other party's default finds no alternative to seeking a remedy in law. Here again it is advisable in the interests of certainty to agree and set out in the contract the remedies envisaged by the parties for the most frequent classes of default: examples of such remedies are given in paragraphs 74-83.

(ii) If they do not do so, the solutions reached by the court or by the arbitrator seized of the case are likely to vary according to the law governing the contract.

(iii) It should be remembered that contractual remedies chosen by the parties may not be enforceable in all cases and nor will they necessarily exclude the application of other remedies available under that law.

D. Remedies of the grantee

74. Non-delivery of know-how

(i) It should be emphasized that non-delivery of know-how is a fundamental breach of contract in its initial stages which is hardly likely to arise between two parties enjoying the necessary mutual confidence. With this reservation in mind the parties may, however, cover such a breach in the manner set out below.

(ii) Should the grantor fail to transmit the know-how or the essential elements thereof, provision may be made for termination of the contract by the grantee and the return of payments already made.

(iii) The contract may expressly provide for payment of damages; it may also exclude the payment of damages by the grantor if his failure is not due to his own fault (see para. 83).

(iv) In some cases a ceiling is fixed to the damages so as not to impose on the grantor disproportionate liabilities.

75. Delay in supplying the know-how

(i) The parties often provide for the payment of fixed or liquidated damages for delay, calculated on the length of the delay. This avoids the uncertainty entailed by the grantee having to prove the actual amount of damage suffered.

(ii) This provision may be coupled with a proviso that in order to be entitled to damages the grantee must have suffered some loss, however small, by reason of the delay.

(iii) The contract may fix a ceiling to the liquidated damages payable which must be reached before the grantee may terminate the contract.

(iv) Alternatively the contract may provide that the grantee is entitled to the amount of the loss which he has actually suffered as a result of the delay.

76. Ascertainment of results obtained by the grantor

Where the parties refer to results obtained by the grantor (see para. 41) and when these results are found not to be satisfactory, the contract may provide what remedies the grantee will be entitled to as described in paragraph 74.

77. Guarantee of results to be obtained by the grantee in his works

(i) The same considerations apply here as are mentioned in paragraph 76.

(ii) There is also the additional hazard for the grantor that operations are not within his control to the same extent as they are when results are obtained by him in his own works. Some provision for failure due to causes beyond the grantor's control is therefore advisable, although the incidence of such causes is a matter of debatable fact which cannot be covered by the terms of the contract, however carefully drawn (see para. 83).

(iii) If the results are not obtained by the grantee, the contract often supplies remedies not provided for by the applicable law.

78. Guarantee against claims by third parties for infringement

When the grantor has guaranteed the grantee against claims by a third party for infringement of the third-party's patent rights, it is advisable to specify the nature and extent of the guarantee and the consequences as between the parties of a successful claim by the third party (see also paras. 64, 65 and 66).

79. Disclosure of secret information (see para. 82 (ii)).

E. Remedies of the grantor

80. Delay in payment

(i) The contract may lay down to what compensation the grantor is entitled for late payments by the grantee, generally by way of interest;

(ii) If, under the law governing the contract, formal notice must be given before the grantor is entitled to claim interest, the parties may conveniently state in the contract that expiration of the due date for payment automatically constitutes formal notice.

81. Default in payment

(i) In the event of failure in payment by the grantee, the parties may specify what periods must elapse before the grantor may exercise his remedy and under what conditions this remedy, including any right to terminate the contract and recover damages, may be exercised;

(ii) Where the contract provides for the return of the elements of the know-how (documents, equipment, etc.) in the event of termination, it also often provides for payment of a lump sum by the grantee, as compensation for the fact that the grantee has had knowledge of the know-how and acquired the possibility of using it.

82. Disclosure of secret information

(i) Secrecy being in the majority of cases one of the important elements of the contract, the latter will usually specify the remedies available to the grantor for breach by the grantee of any undertakings as to non-disclosure of secret material, the remedies varying with the gravity of such breach and of the results caused thereby;

(ii) When disclosure is made by the grantor in breach of his agreement (see para. 44), the contract may likewise specify the remedy available to the grantee.

83. Failure to use or use sufficienttly

Where payment by the grantee is related to the results obtained and the contract places on the grantee an obligation to use the know-how during a specified period and to attain a certain quality and volume of production, the parties may provide the remedies - e.g. damages with or without termination - available to the grantor if the grantee fails to comply with this obligation (see para. 57).

F. Exoneration from liability

84. The contract usually provides for reliefs (exoneration from liability) specifying the circumstances beyond the control of the parties which may be claimed by the party who failed to carry out his obligations, in order to avoid liability. In the absence of such a provision, the solution reached by the court or by the arbitrator will vary according to the law applicable.

X. Expiry of the contract

A. Causes

85. Like every contract, a know-how contract comes to an end by the expiration of its term, by the provisions of the contract or by the operation of the law applicable. For example, it may be brought to an end following the giving of notice or by termination.

B. Variety

86. Giving of notice

The parties may in particular provide for this possibility in case of a change in the identity of one of the parties (see para. 13) or of an essential change in the subject-matter of the contract (loss of the value of the know-how as a result of technical progress, loss of the secret character, etc.) (see para. 56 (ii)).

87. Termination

(i) The contract may be terminated for a breach by one of the parties or for any other reason provided for in the contract;

(ii) Sometimes, when large investments have already been made, in order to avoid the serious consequences of termination, the parties endeavour to find other compensations such as the granting of supplementary delays, modification in the amount of payments, recourse to the assistance and technical knowledge of a third party, etc.

C. Consequences

88. (i) Normally, by its expiry, the contract ceases to have any effect. Exceptions however exist (see paras. 25 and sub-paras. below). The expiry of the contract also sometimes entails the grantee's obligation to return the know-how (see para. 32 (iv)).

(ii) Except when the contract comes to an end for a breach by one of the parties, a period of time to allow for winding-up operations is sometimes provided. (These periods can differ for the continuance of manufacture and for that of sale by the grantee.)

(iii) The contract may also provide for a period of time during which the grantee, and sometimes the grantor, remain bound by secrecy obligations.

(iv) Finally the arbitration clause may survive the main contract (see para. 90 (iv)).

XI. Final provisions

A. Law applicable

89. It is desirable that the contract should not give rise to disputes or, failing that, that the judge or the arbitrator should be able to base a settlement on the terms of the contract. The parties cannot be sure however that they have provided for all cases of disputes. Consequently they usually specify the law which is to govern the contract and, in the case of arbitration, that which is to govern procedures, paying due regard to the difficulties which may he presented by the operation of a foreign law as well as by the recognition and enforcement of judicial decisions and arbitral awards given abroad.

B. Arbitration

90. (i) As in any matter connected with international trade, the parties often have recourse to arbitration to settle their disputes;

(ii) In this case, they should be particularly careful to specify in the contract the procedure to be followed for the designation of arbitrators or to refer to an arbitration institute which is to deal with the designation of arbitrators or with the arbitration itself;

(iii) They should also take care to refer to the arbitration procedure and to allow the arbitrators to decide on their competence;

(iv) It is also advisable to provide that the arbitration clause or agreement will survive the main agreement of which it is a part.

C. Authentic text

91. (i) If the contract is drawn up in more than one language, designation of one of the texts as the authentic text will avoid difficulties for the parties in the interpretation of terms and expressions, especially where the parties belong to countries having different legal systems in which like terms do not always correspond with like notions;

(ii) If the parties do not agree on a single authentic text, they should try to ensure that the terms used in the two authentic texts correspond as closely as possible.

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¹ The United International Bureaux for the Protection of Intellectual Property (BIRPI) in article 53/1 of the Model Law for Developing Countries on Inventions, describes know-how as "manufacturing processes or knowledge concerning the use and application of industrial techniques".Mr. Paul Mathely, Rapporteur General of the International Association for the Protection of Industrial Property (IAPIP), gives in the Annales de la propriété industrielle the following definition: "Know-how consists of knowledge and experience acquired for the practical application of a technique".

² The terms "grantor" and "grantee" have no precise legal significance, but correspond to current usage.

³ Although the provision of the know-how may be regarded as an element of technical assistance in the broad sense, the expression "technical assistance", whenever it is used in this Guide, refers to services other than and complementary to the provision of know-how.).

⁴ See also chapter XI: Final provisions.

⁵ According to some laws, the preamble is not ipso facto part of the contract.

⁶ Exclusivity may also apply to other factors besides territory and duration (e.g. manufacturing and selling rights.