Ali Imam a primary patent examiner at the United States Patent and Trademark Office ("PTO") points out the role of Technology Transfer in economic development in his article "How Patent Protection Helps Developing Countries" (AIPLA Quarterly, Fall 2005).
In the global economy, it has become increasingly common to license patents. An inventor may not have enough capital to build a manufacturing plant for a patented product. In this situation, the inventor can grant to a party an exclusive or non-exclusive, royalty-based license to use, make, sell, offer for sale, or import a given patented product. The inventor is enriched economically and can use the profit from the licensing agreement either for the R&D of new products or to improve existing products. On the other side, a licensee may not have enough technical background but may be able to market that product. A licensing agreement with an inventor is an opportunity for a licensee to profit from those business skills.
Licensing agreements may also stimulate the economies of developing countries by creating new employment. Developing countries should pursue licensing agreements with inventors in other countries. Providing strong patent protection will encourage patent holders in developed countries to enter into licensing agreements because production costs in most developing countries are lower than in developed countries.
It may be difficult initially to earn considerable profits from these licensing agreements because of royalty obligations to patent owners. However, in the long term, developing countries could reap generous economic benefits. Providing stronger patent protection could increase economic growth by stimulating trade, FDI, and licensing revenue.
Technology does not solely produce economic benefits. It is an important tool for closing the gap of technological information, which is crucial to the socio-economic development of developing countries.
