Unreasonable licensing restrictions

Depending on the provisions of licence contracts, limitations of one kind of another are generally imposed on licensees. Tied purchases of imports of raw materials, intermediate goods, components, equipment or spare parts are sometimes stipulated on technical grounds, depending on the requirements of a given technology or on the licensor's trade mark. Not infrequently, these clauses are associated with excessively high prices of the delivered inputs, which from the viewpoint of the licensee represents a "hidden" cost of the technology transfer. A common type of restriction is the prohibition of the disclosure of the transferred technology to third parties. In the developing countries such practices often debar domestic firms from access to technologies which are already available locally, thus leading to what are known as "repetitive imports of technology". Other provisions commonly stipulated limit changes in the imported technology, thus reducing or eliminating the possibility of adapting the product or the technology to the local needs and conditions.