farhad emam Farhad Emam
Publish Date : 01/08/2016

Technology Transfer in Rail Transport Industry

EXECUTIVE SUMMARY

Key terms

Siemens, technology transfer, know-how, trade secret, competition law

Summary

It is reported on the website of presstv.ir on January 7, 2016 that:

Iran’s media reported on Thursday that Germany’s Siemens has won several deals to develop the country’s railway infrastructure…

Siemens has also agreed to provide training for the railway sector of Iran, IRNA reported.    

The German engineering powerhouse will in most of its projects be obliged to team up with Iranian companies. This, IRNA’s report added, will be meant to transfer know-how to the Iranian companies.

It was reported on the same website on November 25, 2015 that:

Iran and Russia have signed an agreement worth 1.2 billion euros to electrify a train line, linking north-central Iran to the northeastern border with Turkmenistan, an official says. The agreement signed between Russian Railways and the Islamic Republic of Iran Railways (RAI) envisages constructing power stations and overhead power lines along the Garmsar-Sari-Gorgan-Inche Burun route in Iran….

In both of the above projects apparently an element of technology transfer is included. The questions to be answered, therefore, are:

1) What are the Iranian laws and regulations that apply in general to transfer of technology to Iran?

2) Are there specific rules in the laws of Iran to regulate and protect trade secrets?

3) How would the competition-related issues be regulated by the Iranian laws and regulations?

In this legal report, the above three issues are analysed briefly. More detailed study of these issues will be included in our Booklet on “Technology Transfer Law of Iran”.

I. Laws and regulations concerning technology transfer

At least five types of agreements cover technology transfer. We will explain the relevant laws and regulations of Iran under each of them as follows:

1)  Joint venture agreements: The structure of joint venture agreements allows the foreign party to use its technology as an investment capital in order to benefit from the facilities and advantages available in Iran to foreign investors. The technology or know-how transfer contract is normally an annex to the main joint venture agreement that in majority of the cases results in establishing a joint venture company. We have discussed legal aspects of joint venture in our Booklet No. 2 on Foreign Investment Law of Iran.

2) Invention exploitation agreements: In these agreements, there is no transfer of know-how or knowledge. They just allow one party to exploit the invention. As a result, the legal relationship between the parties is mostly based on the contract law rules and regulations. The Patents, Industrial Designs and Trademarks Registration Act of the Islamic Republic of Iran (2008) also regulates invention exploitation agreements.

3) Knowledge agreements: Contrary to invention exploitation agreements, knowledge agreements comprise transfer of knowledge and information to the party that needs to use the knowledge and information for production of goods or services. Therefore, maintaining confidentiality of the received knowledge is a major element in knowledge agreements. In the next section of this Legal Report, the ways of protecting trade secrets under the laws of Iran are explained.

4) Non-disclosure agreements: License agreements normally comprise non-disclosure clauses. Due to importance of this matter, sometimes separate non-disclosure agreements are signed by the parties. Legal relationship between the parties, therefore, depends heavily on the terms and conditions included in this type of agreement.

5) Licensing agreements: The most practical form of agreement for technology transfer, perhaps, is license agreement. Study of license agreements is beyond the scope of this Legal Report. Suffice to say that the Management and Planning Organization of Iran has prepared standard contracts for different forms of licensing agreements. They will be analyzed by one of our Booklets on Licensing Law of Iran.

II. Trade secrets under the law of Iran

The following laws and regulations apply to protection of trade secrets in Iran:

a. Article 125 of the Islamic Penal Act (Ta’azirat); and

b. Articles 64, 65 and 75 of the Electronic Commerce Act.

Under Article 64:

In order to protect legitimate and fair competitions in electronic transactions, illegal acquisition of trade or economic secrets of agencies and institutions or the disclosure of such secrets to third parties in electronic environment is deemed an offence and the offender will be sentenced according to this Law.

III. Competition law of Iran

The following international and domestic texts establish the foundation of the competition law of Iran:

a. Article 10bis of the Paris Convention for the Protection of Industrial Property;

b. Articles 1 and 2 of the Tort Act of Iran (1961);

c. Article 133 of the Act Amending the Commercial Code of Iran (1969);

d. Articles 43 and 44 of the Constitution of the Islamic Republic of Iran;

e. Articles 37, 38, 40 and 41 of the Act on Fourth Development Plan of the Islamic Republic of Iran; and

f. The Act on Implementation of the General Policies of Article 44 of the Constitution.

Under Article 44 of the last Act on the above list:

Any complicity among persons through (written, electronic, verbal or practical) contracts, agreements or accords resulting in one or multiple effects mentioned below that will obstruct competition is prohibited:

1- Specifying prices for purchase or sale of goods or services and process of determining it in the market either directly or indirectly.

2- Restricting or controlling amount of production, purchase or sale of goods or services in the market.

3- Imposing discriminatory conditions in identical transactions with trading partners.

4- Having the trade party conclude contract with a third party or dictating terms of contract to them.

5- Conditioning conclusion of the contract on acceptance of supplementary commitments by other parties that has nothing to do with the contract based on trade norms.

6- Dividing or giving shares in the market for goods or services between two or more persons.

7- Restricting market access of those not signatory to the contract, agreement or accord.

GOOD TO KNOW

To learn more about the issues mentioned in this Legal Report, you may read the following texts. If after reading this Legal Report and the following texts, you still have questions that call for detailed responses, you may send them to us by clicking on “Our Services” button and following the procedure explained there.

RELEVANT LEGAL NEWS:

1. 1. Law in Iran Legal News: Siemens seals railroad deals with Iran, Friday, January 8, 2016.

2. Law in Iran Legal News: Iran, Russia sign 1.2 billion Euro railway deal, Friday, January 8, 2016.

3. Law in Iran Legal News: Iran-Turkey Transport Corridor, Monday, August 24, 2015.

4. Law in Iran Legal News: New Silk Road Plan, Monday, August 24, 2015.

5. Law in Iran Legal News: Iran-Armenia Railway, Monday, August 24, 2015.

6. Law in Iran Legal News: Kazakhstan, Turkmenistan, Iran railway tariffs, Monday, August 24, 2015.

RELEVANT LEGAL REPORTS:

1. Law in Iran Legal Report No. 2: Three Forms of Foreign Investment in Iran, Wednesday, August 12, 2015.

Law in Iran Legal Report No. 4: Legal Analysis of Transport Corridors of Iran, Monday, August 24, 2015.

RELEVANT BOOKLETS:

1. Law in Iran Booklet No. 2: Foreign Investment Law of Iran, Wednesday, August 12, 2015.

2. Law in Iran Booklet No. 4: Transport Corridors of Iran, Monday, August 24, 2015.

 

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