Philippine Technology Transfer Act of 2009

Key definitions and concepts

“Intellectual Property (IP)” covers intangible assets resulting from creative work, including inventions, literary and artistic works, and symbols, names, images, and designs used in commerce. (Section 4)
“Intellectual Property Rights (IPRs)” are rights recognized and protected under Republic Act No. 8293 or the “Intellectual Property Code of the Philippines.” (Section 4)
“Potential IPRs” are IP or products of creation and research that form the subject matter of IPRs but are not yet protected by the statutory grant of IP rights. (Section 4)
“Protection of IPs” refers to the statutory grant of rights such as issuance of patents and registrations of utility models, industrial designs, and trademarks, or availment of protection of undisclosed information and other rights as may be provided by law. (Section 4)
“Government Funding Agency (GFA)” includes any government agency or instrumentality, or government-owned and/or -controlled corporation that provides research grants and other technical and material support from government appropriations and resources and those sourced from government-managed Official Development Assistance (ODA) funds. (Section 4)
“Parent Agency” is the department or agency exercising control or supervision over GFAs and RDIs; where multiple GFAs exist, the agency with the largest financial contribution is deemed the parent agency, unless otherwise provided. (Section 4)
“RDI” refers to a public or private organization, association, partnership, joint venture, higher education institution, or corporation that performs R&D activities and is duly registered and/or licensed to do business in the Philippines or has legal personality in the Philippines; private RDIs must be owned solely by Filipino citizens or by corporations/associations with at least sixty percent (60%) capital owned by Filipino citizens, excluding RDIs covered by international bilateral or multilateral agreements. (Section 4)
“Technology transfer” is the process by which one party systematically transfers to another knowledge for manufacture, application of a process, or rendering of a service, which may involve transfer, assignment, or licensing of IPRs. (Section 4)
“Revenue” covers all monetary and non-monetary benefits from development, production, transfer, use, and/or commercialization of IPRs, including income from assignments and royalties from licenses. (Section 4)
“Commercialization” is deriving income or profit from a technology, including creation of a spin-off company, licensing, or sale of technology and/or IPRs. (Section 4)

Coverage of affected activities and entities

The Act applies to all R&D activities carried out on behalf and for the interest of the Philippine government by RDIs receiving grants directly from GFAs. (Section 5)
The Act covers intellectual property rights derived from government-funded R&D activities. (Section 5)
The Act covers government agencies that fund R&D activities and provide financial, technical, or material support to such R&D activities. (Section 5)
The Act covers institutions that implement government funded R&D. (Section 5)

Ownership of IP and IPRs

Ownership of IPs and IPRs from government-funded research is generally vested in the RDI that actually performed the research. (Section 6)
Ownership shifts away from the performing RDI under these circumstances:
- When the RDI executes a public, written agreement sharing, limiting, waiving, or assigning its ownership in favor of the GFA; such execution must be voluntary and must protect public interest, particularly national security, nutrition, health, or development of other vital sectors. (Section 6)
- When the RDI fails to disclose potential IPRs to the GFA, in which case the GFA assumes the rights to the potential IPR. (Section 6)
- When the RDI fails to initiate protection of potential IPRs within a reasonable time from confidential disclosure to the GFA, which must not exceed three (3) months from public disclosure; in that case, the GFA assumes the rights. (Section 6)
- When the RDI ceases to become a Filipino corporation as defined in Article I, Section 4(i) of the Act. (Section 6)
In collaborative research involving two (2) or more RDIs funded by the GFA, the RDIs own the IPRs jointly or as otherwise stipulated in the research agreement. (Section 6)
For agreements between RDIs and other funding entities, the Act requires full knowledge of the GFA, and the agreement must be strictly in accordance with the Act. (Section 6)
The Act does not modify or prejudice IPs owned by employees of RDIs under the IP Code and other existing laws. (Section 6)

Rights and responsibilities of GFAs and RDIs

GFAs must protect government interest in IPs and IPRs through suitable provisions in the research funding agreement. (Section 7)
GFAs may withhold from public disclosure for a reasonable time any information relating to a potential IPR of the RDI to allow full protection. (Section 7)
GFAs must monitor RDI efforts and effectiveness in securing IP protection and pursuing commercialization, and provide alternative solutions and assistance in case of shortfall in performance. (Section 7)
GFAs must ensure adequate freedom to use IP for further research and comply with requirements for publication of information as appropriate under government policy or academic policy or the RDI’s institutional mandate. (Section 7)
GFAs must allow sharing of revenues from commercialization in a way that is not onerous to commercialization. (Section 7)
When a GFA assumes commercialization of IPs, it may directly negotiate commercialization agreements, subject to transparency and accountability requirements, COA rules and regulations, and Article IX, Section 20 of the Act. (Section 7)
When a GFA assumes commercialization, it must obtain:
- a written recommendation from the Secretary of the Department of Science and Technology (DOST), and
- a fairness opinion report from an independent third party body composed of experts from the public and private sectors as determined by the DOST. (Section 7)
The fairness opinion report must state the opinion on the fairness to the GFA of the proposed transaction, particularly financial terms, and must include review and analysis of the proposed transaction, financial statements, industry information, economic conditions and assumptions, and a comparison of similar transactions. (Section 7)
GFAs are not precluded from resorting to other modes of commercialization allowed by applicable laws. (Section 7)
RDIs must identify, protect, and manage IPs generated from GFA-funded R&D and pursue commercial exploitation diligently as required performance in the research funding agreement and as allowed by the Act and other applicable laws. (Section 8)
For commercialization by public RDIs via direct negotiation, public RDIs must obtain:
- a written recommendation from the Secretary of the DOST, and
- a fairness opinion report from an independent third party body composed of experts from the public and private sectors as determined by the DOST. (Section 8)
The fairness opinion report for public RDIs must state fairness to the RDI of the proposed transaction, particularly financial terms, and must include the provisions in Section 7(d), paragraph 2 relating to fairness-opinion content. (Section 8)
Public RDIs are not precluded from resorting to other modes of commercialization allowed by applicable laws. (Section 8)
If the RDI seeks to recover ownership of potential IPRs vested in the GFA under Section 7, the RDI’s responsibility to protect potential IPRs continues. (Section 8)
RDIs must provide a means for addressing shortfall in performance in utilizing and commercializing IP. (Section 8)
RDIs must notify the GFA within a reasonable time of all IP applications, licenses, and assignments. (Section 8)
Each application for IP protection must disclose any biodiversity and genetic resource, traditional knowledge, and indigenous knowledge, systems and practices as defined in Republic Act No. 8371 and Republic Act No. 9147. (Section 8)
RDIs must report annually to the GFA on the progress of IP and/or IPR commercialization efforts and all agreements entered and licenses granted. (Section 8)
RDIs must keep account of revenues and payments to the GFA if required by the research funding agreement. (Section 8)
RDIs must ensure access to skills and management capability to perform IP ownership, management, and exploitation duties effectively; smaller RDIs are encouraged to pool and share resources. (Section 8)
RDIs must accord staff incentives consistent with existing laws to sustain efforts in identifying valuable IP and pursuing commercialization. (Section 8)
RDIs may keep confidential, within a reasonable time, documents or information relating to potential IPRs not yet fully protected by law. (Section 8)
RDIs must make confidential disclosure to the GFA of potential IPRs with commercialization and/or technology transfer possibilities within a reasonable time, and failure triggers Section 6. (Section 8)
RDIs must inform the GFA of any agreement involving research funded by the GFA entered into with any other entity or person; failure to inform renders the agreement invalid as against the GFA, without prejudice to GFA rights under the Act. (Section 8)
RDIs may create spin-off companies to pursue commercialization when necessary, subject to their mandates allowed by law. (Section 8)

IP management reports for government RDIs

Government RDIs conducting R&D through an annual government budget must submit intellectual property management reports annually to the national government agencies where they are attached. (Section 9)
Each annual IP management report must contain:
- plans for securing protection for IPs with commercial promise,
- technology transfer approaches to be pursued, and
- progress of ongoing commercialization of technologies derived from their own-budget R&D. (Section 9)
Concerned government and/or parent agencies must monitor RDI efforts and effectiveness in securing IP protection and pursuing commercialization based on the annual IP management reports. (Section 10)

Revenue sharing and revolving fund use

Revenues from commercialization of IPs and IPRs from GFA-funded R&D accrue to the RDI unless the research funding agreement contains a revenue sharing provision. (Section 11)
The GFA’s total share cannot be greater than the RDI’s share. (Section 11)
In joint funding situations where a GFA funds part and other entities fund part, the RDI may enter into contractual agreements with the other funding entities. (Section 11)
Revenue sharing between RDI and the researcher is governed by an employer-employee contract or related agreements, without prejudice to researchers’ rights under Republic Act No. 8439. (Section 11)
Public RDIs undertaking technology transfer must use their share of commercialization revenues derived from IP generated from GFA-funded R&D. (Section 18)
Income from commercialization of IPs and/or IPRs from R&D funded by public funds must be constituted as a revolving fund for the RDI, deposited in an authorized government depository bank under accounting and auditing rules and regulations. (Section 18)
Revolving fund income must be used to defray intellectual property management costs and expenses and to fund R&D, science and technology capability building, and technology transfer activities, including operation of technology licensing offices. (Section 18)
Revolving fund income must not be used for payment of salaries and other allowances. (Section 18)
If income after paying all IPR management costs and expenses, including royalties to other parties, exceeds ten percent (10%) of the RDI’s annual budget, at least seventy percent (70%) of the excess income must be remitted to the Bureau of Treasury. (Section 18)
The remittance rule applies only if the GFA has solely funded the research. (Section 18)
The remittance rule does not apply to state universities and colleges and government-owned and -controlled corporations enjoying fiscal autonomy under their charters or other applicable laws. (Section 18)

Commercialization by researchers and conflict rules

An RDI must allow its researcher-employee to commercialize or pursue commercialization of GFA-funded IP and/or IPRs in meritorious cases by creating, owning, controlling, or managing a company or spin-off firm undertaking commercialization, or by accepting employment as officer, employee, or consultant in a spin-off firm undertaking commercialization. (Section 12)
The researcher-employee must take a leave of absence when applicable for one (1) year, renewable for another year, for a total period not exceeding two (2) years, from the time the researcher signifies in writing the desire to create or participate in a spin-off company. (Section 12)
During the leave of absence, the researcher-employee must be allowed access to the RDIs’ laboratory facilities subject to reasonable fees and regulations the RDIs may impose. (Section 12)
The leave of absence counts for computing length of service for retirement but not for commutation of leave credits in a public RDI. (Section 12)
The researcher-employee does not earn leave credits in the public RDI during the leave of absence. (Section 12)
The leave of absence does not affect security of tenure or result in loss of seniority rights. (Section 12)
Where a researcher of a public RDI would be employed by an existing company pursuing commercialization, Republic Act No. 8439 governs. (Section 13)
RDIs must properly manage conflicts of interest through guidelines for researcher-employees, including:
- ensuring researchers are fully accountable for their research and that commercial objectives do not divert them from the RDI’s core research program; (Section 14)
- requiring RDI heads to ensure that when researchers have any direct or indirect financial interest in a spin-off company, they must not act on behalf of the RDI in transactions with that company; (Section 14)
- requiring researchers nominated as non-executive directors to ensure the RDI’s interests are not compromised by their role when the same RDI holds an equity stake; (Section 14)
- requiring collaborative undertakings with spin-offs or existing companies to be governed by a formal written public agreement. (Section 14)

Government use, compulsory licensing, and assumption

The Act adopts the grounds, terms, and conditions for use by government or third person authorized by government and/or compulsory licensing as stated in the IP Code for all IPRs generated under the Act. (Section 15)
The GFA and/or the parent agency may assume ownership of potential IPRs in cases of national emergency or other circumstances of extreme urgency, or where public interest requires, particularly national security, nutrition, health, or development of other vital national economy sectors, as determined by the head of the parent agency. (Section 16)
The determination by the head of the parent agency must be made within thirty (30) days after receipt of the recommendation of the head of the GFA. (Section 16)
The GFA’s recommendation must be made within thirty (30) days upon discovery of the potential IPR by the GFA or disclosure by the RDI pursuant to Section 8(c), or upon written notice or petition by other government agencies or other interested persons. (Section 16)
If the parent agency itself is acting as the GFA, the head of the parent agency may determine motu proprio or upon written notice or petition. (Section 16)
The right to the potential IPR is assumed by the GFA upon written order, declaration, or determination by the Department Secretary or head of the parent agency. (Section 16)
The department or agency with functional jurisdiction over the technology or IPRs is deemed the parent agency. (Section 16)
The determination must be accompanied by analysis and justification of the reasons. (Section 16)
The RDI may file opposition within fifteen (15) calendar days from notice or publication of the written determination. (Section 16)
Assumption of rights carries the obligation to equitably share with the RDI or other funding agencies any profits generated from the IPR. (Section 16)
Rights to potential IPRs revert to the RDI upon cessation of the cases under the section as determined motu proprio or upon petition of the RDI. (Section 16)
Except where otherwise provided by the IP Code, in all cases arising from implementation of this Article, no court except the Supreme Court shall issue a temporary restraining order or preliminary injunction or other provisional remedies preventing immediate execution. (Section 17)

Institutional mechanisms and guidelines

The DOST must establish a system for cost-effective sharing of and access to technologies and knowledge generated from government-funded R&D by developing policies and procedures on public access, which must be made known to the public. (Section 19)
DOST public access policies must promote advancement of R&D, boost quality, enable cross-disciplinary collaboration, increase returns from public investment in R&D, and contribute to betterment of society. (Section 19)
DOST must call a regular national conference of all GFAs and RDIs to promote multidisciplinary, joint and cross collaboration; coordinate and rationalize the R&D agenda; and harmonize R&D agendas and priorities. (Section 19)
All RDIs are encouraged to establish their own Technology Licensing Offices (TLOs) in whatever form and adopt their own IPR management and technology transfer policies consistent with the Act, other laws, the policy of the Intellectual Property Office Philippines, and the national policy and mandate of their parent agency. (Section 20)
The DOST, DTI, and IPO—in consultation with GFAs such as CHED, DA, DOH, DOE, DENR, and DND—must undertake capacity-building activities for commercializing IPs. (Section 21)
DOST (as chair and convenor), together with DTI and IPO, jointly issue guidelines on IP valuation, commercialization, and information sharing, including considerations such as public benefit and national interest, market size, cost and income. (Section 21)
The joint guidelines must be issued within one hundred twenty (120) days from the Act’s effectivity. (Section 21)

Dispute resolution and administrative rules

Disputes on the determination for government ownership are resolved through an administrative procedure provided by the Implementing Rules and Regulations (IRR) of the Act. (Section 22)

Administrative, funding, oversight, and IRR

Failure of GFAs or RDIs to fulfill responsibilities or violation of any provision by any person or juridical person subjects the involved person to appropriate administrative, criminal, or civil liability under applicable laws. (Section 23)
A Congressional Oversight Committee called the Technology Transfer Oversight Committee must be formed for effective implementation, composed of:
- five (5) Senate members including the Chairpersons of the Senate Committees on Science and Technology and Trade and Commerce, and
- five (5) House of Representatives members including the Chairpersons of the House Committees on Science and Technology and Trade and Industry. (Section 24)
The Technology Transfer Oversight Committee is jointly chaired by the Chairpersons of the Senate and House Committees on Science and Technology, and vice-chaired jointly by the Chairpersons of the Senate Committee on Trade and Commerce and the House Committee on Trade and Industry. (Section 24)
Implementation expenses and operational expenses are funded from budget appropriations and other incomes of GFAs and public RDIs, and GFA/public RDI heads must include implementation in their agency programs. (Section 25)
The COA audits the funds of GFAs and public RDIs to ensure transparency and accountability. (Section 25)
The DOST and the IPO, with participation of GFAs, RDIs, and other stakeholders, must formulate the IRR, chaired by the DOST Secretary. (Section 26)
The IRR must be issued within one hundred twenty (120) days after effectivity. (Section 26)
Copies of the IRR must be submitted to the Committees on Science and Technology of both Houses within thirty (30) days after promulgation, and to other agencies required by law. (Section 26)
Nothing in the IRR derogates copyright ownership conferred by the IP Code or other applicable laws; the IPO issues rules on ownership of copyrights. (Section 26)
The IPO must issue IRR implementing the disclosure requirements stated in Section 8. (Section 26)
The Act’s provisions apply to intellectual property created under existing laws, including Republic Act No. 9168 or the “Philippine Plant Variety Protection Act of 2002.” (Section 27)

Repeal, separability, and effectivity

All laws, presidential decrees, executive orders, presidential proclamations, rules and regulations, or parts thereof, inconsistent with the Act are repealed or modified accordingly. (Section 28)
If any provision of the Act is declared unconstitutional, the validity and effectivity of the remaining provisions are unaffected. (Section 29)