Technology transfer: interpretation rules

On October 19, 2005 the Official Gazette published the Resolution P 328/2005, enacted by the Argentine Industrial Property Institute (“Instituto Nacional de la Propiedad Industrial”). The Resolution establishes which acts or contracts remain excluded from the concept of “technology” set forth by Decree No 580/01 and, therefore, do not fall within the scope of the technology transfer regime provided by Law No 22,426.

Section 1 of the Decree No 580/81 establishes that the concept “technology” shall mean: (a) invention patents, (b) industrial models and designs, and (c) any technical knowledge to be applied for the manufacture of a production or the provision of a service.

Section 1 of the Resolution declares that the following activities do not fall within the concept of “technology”:

    a) acquisition of products;

    b) consultancy or technical assistance services, licenses of know how or information, knowledge or application methods in the financial, commercial, judicial, marketing or sales areas, to prepare the participation in bidding or contracting processes or the obtention of permits, bond offering as well as all those acts which do not clearly or precisely evidence the incorporation of technical knowledge directly applied to the productive activity of the local company;

    c) software licenses of use or update software agreements;

    d)services of repairing, supervision of repairing, maintenance, putting into operationplants or machinery, etc., which do not include the training of the local company personnel;

    e) in general, all the activities which represent the direct contracting of tasks inherent to the ordinary functioning of the local company.

Section 3 of the Resolution adds that in the event that contracts are submitted to registration before their expiration term, which involve payments due to previous fiscal years, the submitter will have to file an accounting certificate which proves the existence of debt balances in concept of royalties or unpaid obligations related to the contract applied for registration.

In addition, to renew or amend the registration of acts or contracts previously registered, the Resolution requests the filing of a sworn statement explaining the new knowledge the local companies receive or expect to receive during the new contractual term. The sworn statement must also include a chart comparing the technology received by virtue of the registered contract and the technology the local company will receive or expects to receive during the new contractual term.

The Resolution contains other articles referred to tax issues. Section 5 of the Resolution establishes, for instance, the meaning of “technical assistance, engineering and/or consultancy” to the purpose of interpreting Section 93, paragraph a) subparagraph 1º of Law No 23,760 on Income Tax.

The Resolution is currently in force and although its purpose has been to clarify which acts are subject to the technology transfer regime provided in Law No 22,426, it seems that it will be the Argentine Industrial Property Institute which will ultimately decide on a practical basis.