Technology Transfer and Patent Licensing

Technology transfer in Germany: the legal framework

Technology transfer means making technology developed by one company available to another — by licensing patents, know-how, software copyright or design rights, by assigning them, or by sharing them in research collaborations. In Germany, technology transfer agreements are governed by general contract law, the Patent Act and other IP statutes, and by competition law. Since 1 May 2026, a revised EU Technology Transfer Block Exemption Regulation (Regulation (EU) 2026/877, TTBER) and new Technology Transfer Guidelines apply, replacing the 2014 rules that expired on 30 April 2026. German competition law applies the EU block exemptions directly to domestic agreements (§ 2(2) of the Act against Restraints of Competition, GWB).

For licensors and licensees, the practical questions are how to structure the licence, how to set royalties, which restrictions are permitted and how to protect the technology when the relationship ends. This note addresses those questions with a focus on German law and the 2026 changes.

German industry is a major licensor and licensee at the same time. Mittelstand companies license specialised machinery and process know-how abroad, automotive and electronics groups take licences for standards and software, and universities and research institutes license inventions to start-ups. Each setting raises different issues, but the core legal toolkit is the same: a clear definition of what is licensed, a royalty mechanism that both sides can audit, and restrictions that stay within competition law.

Licence structures under German law

German patent law expressly allows exclusive and non-exclusive licences, for all or part of Germany (§ 15(2) PatG). A licensee who exceeds the limits of its licence can be sued for patent infringement, not only for breach of contract. Licences granted earlier survive a later transfer of the patent or a later licence (§ 15(3), Sukzessionsschutz). There is no registration requirement for licences to be effective, although exclusive licences can be recorded. Licences can be granted orally, but written agreements are essential in practice to prove scope, territory and royalties, and to satisfy auditors, tax authorities and acquirers who later review the arrangement.

Typical structures include:

• Exclusive licence: only the licensee may use the technology in the field and territory, sometimes even excluding the licensor. Exclusive licensees can usually sue infringers in their own name.
• Sole licence: the licensor keeps its own right to use but grants no further licences.
• Non-exclusive licence: the licensor can license others; common for standards and platform technologies.
• Field-of-use and territorial licences: limited to specific applications, products or countries.
• Cross-licences and settlement licences: used to resolve disputes or enable freedom to operate.
• Know-how licences: for secret technical information, often combined with patents; protection depends on confidentiality and the Trade Secrets Act.

Assignment or licence?

An assignment transfers ownership; a licence grants permission while the licensor keeps the right. Assignments of German patents need no particular form, but the transfer should be recorded in the register so that the new owner can sue without difficulties. For know-how, which is not a registered right, "assignment" means transferring the information and obliging the transferor to keep it confidential and not use it. In group structures, IP is often centralised in one company that licenses it to operating subsidiaries; such intra-group licences must reflect arm's-length terms for tax purposes and should be documented as carefully as third-party licences.

Royalties and commercial terms

Royalty structures range from running royalties based on net sales or units, through lump sums and milestone payments, to equity or revenue-sharing in joint ventures. German law gives the parties wide freedom. Points that frequently cause disputes include the royalty base for combination products, deductions in the definition of "net sales", most-favoured-licensee clauses, audit rights, payment after patent expiry or revocation, and withholding tax on cross-border royalty payments.

Royalties that continue after the licensed patents expire are not automatically invalid; the Guidelines accept them where they reflect know-how or are a means to spread payments. However, the agreement should make clear what the payment is for. Where the licensed patent is revoked, the licensee generally cannot reclaim royalties already paid for the period in which it enjoyed a de facto exclusive position, but the agreement should regulate this expressly. For tax aspects of royalties, see our page on international tax.

Competition law: the revised TTBER

Licensing agreements can restrict competition, for example by limiting output, allocating markets or tying licensees. The TTBER exempts technology transfer agreements from the prohibition in Article 101(1) TFEU if market-share thresholds are met and no hardcore restrictions are included. The thresholds are unchanged in the 2026 revision: a combined market share of 20% for agreements between competitors and individual market shares of 30% each for agreements between non-competitors, according to the Commission's explanatory note.

The main changes in 2026 are:

1. Technology market shares: technologies that have not yet generated sales of contract products are treated as having a market share of zero, and the grace period when thresholds are exceeded during the agreement has been extended from two to three years.
2. Data licensing: the new Guidelines apply TTBER principles to licensing databases protected by copyright or the sui generis database right, confirm that the TTBER can apply where data qualifies as know-how, and state that data sharing mandated by the Data Act will generally comply with Article 101.
3. Technology pools: the soft safe harbour now requires effective disclosure of the pooled rights and the essentiality methodology, prohibits double dipping and clarifies that the pool's own licences must be on FRAND terms.
4. Licensing negotiation groups: new guidance distinguishes genuine groups of implementers negotiating jointly from buyer cartels, without a safe harbour.
5. Definitions: active and passive sales are now defined in line with the Vertical Block Exemption Regulation.

Restrictions outside the safe harbour

Agreements that exceed the thresholds are not automatically unlawful; they require an individual assessment under Article 101(3) TFEU, guided by the Technology Transfer Guidelines. Excluded restrictions — such as exclusive grant-backs of the licensee's severable improvements and no-challenge clauses — are not exempted, but the rest of the agreement can remain exempted. Hardcore restrictions, by contrast, remove the benefit of the block exemption for the entire agreement. German courts treat clauses that violate Article 101 TFEU or § 1 GWB as void (§ 134 BGB), and the validity of the remaining agreement then depends on severability clauses and the parties' presumed intentions.

SEPs, pools and FRAND licensing

Standard-essential patents are licensed on FRAND terms, either bilaterally or through pools. The revised Guidelines tighten the conditions for pools and address licensing negotiation groups of implementers, reflecting the importance of standards for connectivity in vehicles and devices. See our insight on SEP and FRAND disputes.

Research collaborations and university licensing

Joint research and development agreements are governed by the separate Research and Development Block Exemption Regulation, while licensing of the results falls under the TTBER. Collaboration agreements should define background and foreground IP, ownership of joint results, access rights, publication rights and exploitation. University partners have specific rules on employee inventions and publication (§ 42 ArbnErfG); see our insight on employee inventions. Know-how transferred in collaborations needs confidentiality protection; see trade secrets protection under the GeschGehG.

Licences in insolvency and change of control

What happens to a licence if the licensor becomes insolvent is a classic risk for licensees in Germany. An insolvency administrator can choose whether to perform mutual contracts that have not been fully performed, which can put ongoing licences at risk. Licensees often seek protection through structures such as an upfront fully paid licence, security over the licensed rights or escrow arrangements for software and know-how. Conversely, licensors should regulate what happens if the licensee is acquired by a competitor: change-of-control clauses and termination rights are common, but they must be drafted with competition law in mind. See our page on insolvency proceedings.

Export control, sanctions and investment screening

Technology transfer can be an export. Transferring controlled technology — including technical data, software and know-how relating to dual-use items — to recipients outside the EU may require a licence from the Federal Office for Economic Affairs and Export Control (BAFA) under the EU Dual-Use Regulation and German foreign trade law, even where no goods move.

Sanctions regimes restrict technology transfers to listed persons and certain countries. Licence and collaboration agreements should allocate responsibility for export classification and licences and allow suspension if a transfer becomes prohibited. Acquisitions of German technology companies by foreign investors may also be subject to investment screening. See our page on export control and sanctions.

Disputes under licence agreements

Licensing disputes typically concern royalty calculations, scope of use, improvements, termination and validity. Arbitration is common in cross-border technology transfer because it offers confidentiality, expert tribunals and enforceability under the New York Convention. Where the licensed rights are challenged in parallel proceedings, the agreement should clarify whether the licensee may attack validity, what happens to royalties during proceedings and whether the dispute resolution clause also covers infringement claims if the licensee exceeds its licence.

Practical drafting checklist

• Define licensed rights precisely: patents, applications, know-how, software, data.
• Set field, territory, exclusivity and sublicensing rights.
• Define the royalty base, payment schedule, reporting and audit rights.
• Regulate improvements and grant-backs in line with the TTBER.
• Address validity challenges, enforcement against infringers and cost sharing.
• Include confidentiality, export control and sanctions clauses.
• Plan termination: sell-off periods, return of know-how, survival of licences in insolvency.
• Choose governing law and dispute resolution, often arbitration seated in Germany or another neutral venue for cross-border technology transfer.

How TRW & Co helps with technology transfer

We draft and negotiate patent, know-how, software and data licences, research collaboration agreements and IP assignments for German and international companies, universities and investors. Our IP and antitrust lawyers work together to assess technology transfer agreements under the revised TTBER and Guidelines, to structure pools and licensing programmes, and to resolve licensing disputes in court or arbitration. We also review licence portfolios in M&A. See our pages on IP and patents and commercial contracts, or contact us.