Technology Transfer Agreement (Kenya)
TECHNOLOGY TRANSFER AGREEMENT
Science, Technology and Innovation Act No. 28 of 2013 | Industrial Property Act No. 3 of 2001 | Law of Contract Act Cap. 23
THIS TECHNOLOGY TRANSFER AGREEMENT is made on [Agreement Date]
BETWEEN:
(1) [Transferor Name] (BRS Registration Number: [Transferor BRS Number]), incorporated or resident in [Transferor Country], having its registered address at [Transferor Address] (the "Transferor"); and
(2) [Transferee Name] (BRS Registration Number: [Transferee BRS Number]), having its registered address at [Transferee Address] (the "Transferee").
The Transferor and the Transferee are hereinafter referred to individually as a "Party" and collectively as the "Parties".
BACKGROUND
A. The Transferor is the owner of the technology, intellectual property, and know-how described in Clause 2 of this Agreement (the "Technology").
B. The Transferee wishes to obtain a licence to use, develop, and commercialise the Technology within the territory and field of use defined in Clause 3, in exchange for the consideration set out in Clause 4.
C. This Agreement is entered into under the Science, Technology and Innovation Act No. 28 of 2013, the Industrial Property Act No. 3 of 2001, the Copyright Act Cap. 130, the Law of Contract Act Cap. 23, and all other applicable laws of Kenya.
1. DEFINITIONS
1.1 "Technology" means: [Technology Name] — [Technology Description].
1.2 "Patent Rights" means all patents and patent applications registered or pending registration with the Kenya Industrial Property Institute (KIPI) under the Industrial Property Act No. 3 of 2001, including: [Patent Details].
1.3 "Copyright" means all copyright in software, technical drawings, databases, and other works protected under the Copyright Act Cap. 130, including: [Copyright Details].
1.4 "Know-How" means the Transferor's confidential and proprietary technical information, trade secrets, processes, and expertise related to the Technology, including: [Know-How Description].
1.5 "Deliverables" means the technical materials to be provided by the Transferor to the Transferee under this Agreement: [Deliverables Schedule].
1.6 "Improvements" means any modification, enhancement, development, or derivative of the Technology developed by or on behalf of the Transferee during the term of this Agreement.
2. GRANT OF LICENCE
2.1 The Transferor hereby grants to the Transferee a [Licence Type] licence to use the Technology, including the Patent Rights, Copyright, and Know-How, for the following purposes and within the following scope:
2.2 Field of use: [Field Of Use].
2.3 Licensed territory: [Territory].
2.4 Sublicensing: [Sublicence Permitted]. Where sublicensing is permitted, the Transferee shall ensure all sublicensees execute a written sublicence agreement containing confidentiality and use restrictions at least as protective as those in this Agreement. The Transferee shall promptly notify the Transferor of each sublicence granted.
2.5 Where the licence includes a patent licence, the Transferee shall register the patent licence with the Kenya Industrial Property Institute (KIPI) under Section 58 of the Industrial Property Act No. 3 of 2001 within 60 days of the effective date of this Agreement, at its own cost.
2.6 This Agreement is a licence only. No ownership of the Technology, Patent Rights, Copyright, or Know-How is transferred to the Transferee. All intellectual property remains vested in the Transferor subject only to the rights expressly granted herein.
2.7 NACOSTI notification: [NACOSTI Notification]. Where NACOSTI notification or approval under the Science, Technology and Innovation Act No. 28 of 2013 is required, the Parties shall cooperate to make the required notification before or promptly after execution of this Agreement.
3. DELIVERABLES AND TRAINING
3.1 The Transferor shall provide the following Deliverables to the Transferee within the timeframes agreed in writing between the Parties: [Deliverables Schedule].
3.2 The Transferee shall acknowledge receipt of each Deliverable in writing within 5 business days of receipt.
3.3 Risk of loss of Deliverables passes to the Transferee upon written acknowledgment of receipt. The Transferor retains backup copies of all technical documentation.
4. CONSIDERATION AND ROYALTIES
4.1 Royalty structure: [Royalty Structure].
4.2 Amount: [Royalty Amount]. Payments shall be made in Kenya Shillings (KES) unless otherwise agreed in writing, by electronic funds transfer to the Transferor's nominated bank account.
4.3 Payment frequency: [Payment Frequency]. The Transferee shall deliver to the Transferor a royalty statement showing the basis for calculation with each payment.
4.4 Withholding tax: [Withholding Tax Rate]. Where withholding tax is applicable, the Transferee shall deduct and remit the applicable withholding tax to the Kenya Revenue Authority (KRA) via the iTax portal within 20 days of the end of the month in which payment was made, and shall issue a withholding tax certificate to the Transferor. Transfer pricing rules under Section 18(3) of the Income Tax Act Cap. 470 and the Income Tax (Transfer Pricing) Rules 2006 apply where the Parties are related parties.
4.5 Audit rights: [Audit Rights]. The Transferor (or its authorised representative) may, on not less than 30 days' written notice, audit the Transferee's sales records and accounts to verify royalty calculations, once per calendar year.
4.6 Late payment: Any payment not made by the due date shall accrue interest at the Central Bank of Kenya base rate plus 3% per annum from the date due until the date of actual payment.
5. CONFIDENTIALITY AND DATA PROTECTION
5.1 The Transferee shall maintain the strictest confidentiality with respect to all Know-How, technical documentation, trade secrets, and other confidential information disclosed by the Transferor under this Agreement, for [Confidentiality Term].
5.2 The Transferee shall restrict access to confidential information on a strict need-to-know basis within its organisation and shall implement technical and organisational security measures appropriate to the nature of the information.
5.3 Where the Technology involves the processing of personal data, the Transferee shall comply with the Data Protection Act No. 24 of 2019 and all applicable regulations made thereunder, administered by the Office of the Data Protection Commissioner (ODPC).
5.4 The obligations of this Clause 5 survive termination of this Agreement for the period specified in Clause 5.1.
6. IMPROVEMENTS
6.1 Ownership of Improvements: [Improvements Ownership].
6.2 Where Improvements are jointly owned, each Party shall have the right to exploit the jointly owned Improvements independently without accounting to the other, unless otherwise agreed in writing. Joint patent ownership under the Industrial Property Act No. 3 of 2001 confers equal rights to each co-owner — the Parties should seek legal advice on the implications of joint ownership before selecting this option.
6.3 Grant-back provisions: Any grant-back obligation requiring the Transferee to assign Improvements to the Transferor shall include fair commercial compensation for the Improvements assigned, to comply with Section 23 of the Competition Act No. 12 of 2010 administered by the Competition Authority of Kenya (CAK).
6.4 The Transferee shall notify the Transferor of any Improvements within 30 days of their development and shall cooperate in filing and prosecuting patent applications for registrable Improvements.
7. TERM, TERMINATION, AND POST-TERMINATION
7.1 This Agreement commences on [Agreement Date] and continues for: [Agreement Term], unless earlier terminated in accordance with this Clause 7.
7.2 Either Party may terminate this Agreement on [Termination Notice Period] written notice for material breach that is not remedied within the notice period.
7.3 Either Party may terminate this Agreement immediately on written notice if the other Party becomes insolvent, enters administration or liquidation under the Insolvency Act No. 18 of 2015, or makes an assignment for the benefit of its creditors.
7.4 On termination, the Transferee shall immediately: (a) cease all use of the Technology, Patent Rights, Copyright, and Know-How; (b) return or destroy all technical documentation in its possession; (c) procure that sublicensees do the same; and (d) provide the Transferor with written certification of compliance within 30 days of termination.
7.5 Termination does not affect accrued rights and obligations, including outstanding royalty payments.
8. GOVERNING LAW AND DISPUTE RESOLUTION
8.1 This Agreement is governed by and construed in accordance with the laws of Kenya, including the Science, Technology and Innovation Act No. 28 of 2013, the Industrial Property Act No. 3 of 2001, the Copyright Act Cap. 130, and the Law of Contract Act Cap. 23.
8.2 Dispute resolution: [Dispute Resolution]. The parties acknowledge that technology transfer disputes frequently involve technical complexity that makes arbitration before a specialist tribunal preferable to court litigation.
8.3 Entire agreement: This Agreement constitutes the entire agreement between the Parties regarding the Technology and supersedes all prior negotiations and representations.
8.4 Stamp duty: This Agreement is subject to stamp duty under the Stamp Duty Act Cap. 480, administered by KRA. The Parties shall ensure the Agreement is stamped at the applicable KRA Stamp Duty office or via the iTax portal before execution.
IN WITNESS WHEREOF, the Parties have signed this Agreement on the date first written above.
Authorised Signatory (Transferor)
________________
Signature
Authorised Signatory (Transferee)
________________
Signature
Witness
________________
Signature
What Is a Technology Transfer Agreement (Kenya)?
A Technology Transfer Agreement in Kenya conveys a defined interest from the assignor to the assignee and fixes the effect of that transfer.
The Science, Technology and Innovation Act No. 28 of 2013 establishes the National Commission for Science, Technology and Innovation (NACOSTI) as the principal regulatory body overseeing research, scientific development, and technology commercialisation in Kenya. NACOSTI, established under Section 5 of the Act, has a mandate to promote and coordinate the application of technology for national development and to regulate the acquisition, adaptation, and transfer of technology from both domestic and foreign sources. Foreign technology transfers into Kenya involving significant consideration or strategic sectors may require NACOSTI notification or approval.
The Industrial Property Act No. 3 of 2001, administered by the Kenya Industrial Property Institute (KIPI), governs patents, utility models, and industrial designs in Kenya. A Technology Transfer Agreement that includes a patent licence must reference the patent registration number issued by KIPI and define whether the licence is exclusive, sole, or non-exclusive. Section 58 of the Industrial Property Act requires that patent licences be in writing and registered with KIPI to be enforceable against third parties and to qualify for certain statutory protections.
The Copyright Act Cap. 130, administered by the Kenya Copyright Board (KECOBO), applies to technology transfers involving software, databases, technical drawings, and other copyright-protected works. Section 33 of the Copyright Act provides that an assignment or exclusive licence of copyright must be in writing signed by or on behalf of the copyright owner. Non-exclusive software licences need not be registered but should be documented in writing for evidentiary purposes under the Evidence Act Cap. 80.
Kenya's Competition Act No. 12 of 2010, administered by the Competition Authority of Kenya (CAK), scrutinises technology transfer agreements for anti-competitive provisions. Under Section 23 of the Competition Act, agreements that restrict a licensee's ability to deal in competing technologies, fix prices, or divide markets may be prohibited. Technology Transfer Agreements should be reviewed for compliance with the CAK's guidelines on intellectual property licensing.
Foreign Exchange considerations apply when royalties or technical fees flow out of Kenya to a foreign transferor. The Central Bank of Kenya (CBK) and the Kenya Revenue Authority (KRA) require that outward remittances for royalties be reported, and the Income Tax Act Cap. 470 imposes withholding tax on royalties paid to non-residents at a rate of 20% under Section 35 of the Income Tax Act, reducible by applicable Double Taxation Agreements (DTAs) such as the Kenya–India DTA or the Kenya–United Kingdom DTA.
A Technology Transfer Agreement in Kenya differs from a simple Intellectual Property Assignment in that a transfer agreement grants rights for a defined period and purpose while retaining underlying ownership with the transferor. An IP Assignment under the Industrial Property Act transfers ownership absolutely. The choice between these instruments has significant tax and commercial implications that should be considered when structuring the transaction.
When Do You Need a Technology Transfer Agreement (Kenya)?
A Technology Transfer Agreement in Kenya is required whenever a technology owner intends to permit another party to use, manufacture, distribute, or develop a technology commercially without relinquishing underlying ownership, and where the arrangement involves more than a simple oral permission or a standard software end-user licence.
A Technology Transfer Agreement is needed when a Kenyan university or research institution registered under the Universities Act No. 42 of 2012 commercialises research outputs by licensing technology to a private sector company. NACOSTI's research commercialisation framework under the Science, Technology and Innovation Act No. 28 of 2013 requires such transactions to be documented in writing, with clear provisions for revenue sharing, publication rights, and the management of improvements to the licensed technology.
A Technology Transfer Agreement is required when a multinational corporation transfers manufacturing technology, process know-how, or proprietary technical documentation to a Kenyan subsidiary or joint venture partner. The transaction must comply with the transfer pricing rules under Section 18(3) of the Income Tax Act Cap. 470 and the Income Tax (Transfer Pricing) Rules 2006, confirming that royalty rates reflect arm's-length pricing to satisfy the Kenya Revenue Authority (KRA).
A Technology Transfer Agreement is needed when a Kenyan technology startup licenses its software platform, algorithm, or mobile application to an enterprise customer or distribution partner. The agreement must address source code ownership, modification rights, data security obligations under the Data Protection Act No. 24 of 2019 administered by the Office of the Data Protection Commissioner (ODPC), and the consequences of insolvency of either party.
A Technology Transfer Agreement is required when a foreign technology provider grants rights to a Kenyan company to manufacture products under a licensed process. Export control considerations, technology security classifications, and NACOSTI reporting obligations must be addressed. The agreement should state clearly whether the transfer includes the right to sublicense the technology to sub-manufacturers or distributors.
A Technology Transfer Agreement is needed when technology acquired through a research collaboration under the Science, Technology and Innovation Act No. 28 of 2013 is to be exploited commercially by one party, requiring the other party's consent and a defined royalty arrangement. Without a written agreement, disputes over ownership of improvements and entitlement to commercialisation revenues frequently arise before the High Court of Kenya.
What to Include in Your Technology Transfer Agreement (Kenya)
A Kenya Technology Transfer Agreement under the Science, Technology and Innovation Act No. 28 of 2013 and the Law of Contract Act Cap. 23 must contain the following essential elements to be commercially sound and legally enforceable.
Parties and Recitals: Full legal names and addresses of the transferor (technology owner) and the transferee; for corporate entities, the Business Registration Service (BRS) or Companies Act No. 17 of 2015 registration number and registered office address. The recitals should identify the nature of the technology and the commercial purpose of the transfer.
Definition and Description of Technology: A precise definition of the technology being transferred, including patent numbers registered with the Kenya Industrial Property Institute (KIPI) under the Industrial Property Act No. 3 of 2001, copyright registration references with the Kenya Copyright Board (KECOBO) where applicable, trade secret descriptions, technical specifications, software version numbers, and the scope of any accompanying know-how, documentation, and training.
Scope and Nature of Licence: Whether the licence is exclusive (granting rights to the transferee alone and precluding the transferor from granting the same rights to others), sole (granting rights to the transferee and the transferor but no third parties), or non-exclusive (allowing multiple licensees simultaneously). The permitted territory — Kenya, East Africa, or global — and the permitted field of use must be clearly stated. Section 58 of the Industrial Property Act No. 3 of 2001 requires patent licences to be registered with KIPI.
Consideration and Royalties: The royalty structure — whether a flat licence fee, a running royalty calculated as a percentage of net sales, a milestone payment, or a combination — must be specified. The currency (Kenya Shillings or a foreign currency), payment frequency, audit rights allowing the transferor to verify the transferee's sales records, and the mechanism for adjusting royalties in the event of currency fluctuation should all be addressed. Withholding tax on royalties paid to non-resident transferors under Section 35 of the Income Tax Act Cap. 470 at 20% (subject to applicable DTAs) must be accounted for.
Substitutions, Improvements, and Upgrades: The agreement should state whether improvements made by the transferee to the licensed technology become the property of the transferee (licensee-owned improvements), revert to the transferor (grant-back provisions), or are jointly owned. Grant-back provisions that require the licensee to assign improvements to the licensor at no cost may attract scrutiny from the Competition Authority of Kenya (CAK) under the Competition Act No. 12 of 2010.
Confidentiality and Trade Secret Protection: The transferee's obligations to maintain the confidentiality of proprietary technical information, to restrict access to the technology within its organisation on a need-to-know basis, and to implement technical and organisational security measures consistent with the Data Protection Act No. 24 of 2019 where personal data is involved.
Term, Termination, and Post-Termination Obligations: The duration of the licence, grounds for early termination (material breach with a cure period, insolvency, change of control, or regulatory withdrawal), and the transferee's obligations on termination to cease use of the technology, destroy or return technical documentation, and certify compliance.
Dispute Resolution and Governing Law: The agreement is governed by the laws of Kenya. Parties may elect arbitration before the Nairobi Centre for International Arbitration (NCIA) under the Arbitration Act No. 4 of 1995, which is particularly appropriate for international technology transfer transactions given the technical complexity of disputes. The forms-legal.com Kenya Technology Transfer Agreement template incorporates all mandatory elements required under the Science, Technology and Innovation Act No. 28 of 2013 and the Industrial Property Act No. 3 of 2001.
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year = {2026},
howpublished = {\url{https://forms-legal.com/kenya/business/contracts/technology-transfer-agreement-kenya}},
note = {Free legal document template}
}Also available for these jurisdictions:
Frequently Asked Questions
Registration requirements for a Technology Transfer Agreement in Kenya depend on the nature of the intellectual property involved. Where the agreement includes a patent licence, Section 58 of the Industrial Property Act No. 3 of 2001 requires the licence to be registered with the Kenya Industrial Property Institute (KIPI) to be enforceable against third parties and to benefit from statutory protections under the Act. An unregistered patent licence remains enforceable between the parties but cannot be relied upon to oppose a subsequently registered competing interest. Where the agreement involves a copyright licence for software, technical drawings, or databases, registration with the Kenya Copyright Board (KECOBO) is not mandatory for the licence to be valid, but is advisable for evidentiary purposes. NACOSTI, established under the Science, Technology and Innovation Act No. 28 of 2013, may require notification or approval for technology transfer transactions involving foreign parties or transactions exceeding prescribed thresholds in strategic sectors. Parties should conduct a regulatory review before execution to ensure all applicable notifications have been made.
Royalty payments made by a Kenyan company to a non-resident technology transferor are subject to withholding tax under Section 35 of the Income Tax Act Cap. 470 at the rate of 20% of the gross royalty amount. The Kenyan payer is responsible for withholding and remitting this tax to the Kenya Revenue Authority (KRA) via the iTax portal within 20 days of the end of the month in which the royalty was paid. Where a Double Taxation Agreement (DTA) exists between Kenya and the transferor's country of residence — such as the Kenya–India DTA, the Kenya–United Kingdom DTA, or the East African Community Double Taxation Agreement — the withholding tax rate may be reduced. The transferor must provide a tax residency certificate issued by the tax authority of their home country to claim DTA benefits. Royalty payments to resident transferors are subject to withholding tax at 5% under the Income Tax Act Cap. 470. The Technology Transfer Agreement should clearly allocate responsibility for withholding tax between the parties.
Yes. The Competition Act No. 12 of 2010, administered by the Competition Authority of Kenya (CAK), prohibits agreements that have the object or effect of preventing, distorting, or restricting competition in Kenya. Technology Transfer Agreements may contain provisions that the CAK considers anti-competitive, including: exclusive dealing restrictions that prevent the licensee from using competing technologies; price-fixing provisions that control the licensee's sale price for products incorporating the licensed technology; market division arrangements; tying clauses that require the licensee to purchase inputs exclusively from the licensor; and grant-back provisions requiring the assignee of improvements to the licensor without fair compensation. Under Section 23 of the Competition Act, such provisions may be declared void, and the parties may face financial penalties. The CAK may, on application, grant an exemption under Section 25 of the Act for agreements that produce demonstrable economic efficiencies. Technology Transfer Agreements should be reviewed by Kenyan competition counsel before signing to identify and restructure any potentially prohibited provisions.
The National Commission for Science, Technology and Innovation (NACOSTI) is established under Section 5 of the Science, Technology and Innovation Act No. 28 of 2013 as the principal government body responsible for regulating and coordinating science, technology, and innovation in Kenya. NACOSTI's mandate includes advising the national government on technology acquisition and transfer policies, maintaining a national register of technology transfer transactions involving public institutions or significant foreign investment, and promoting the commercialisation of indigenous Kenyan technology and research outputs. Research institutions and universities conducting technology transfer must comply with NACOSTI's research ethics and licensing guidelines. NACOSTI works with the Kenya Industrial Property Institute (KIPI) and the Kenya Copyright Board (KECOBO) on matters involving registered intellectual property. Parties to a cross-border technology transfer agreement involving Kenyan public research institutions should confirm whether NACOSTI approval or notification is required before the agreement takes effect. Failure to comply with NACOSTI requirements may result in the agreement being unenforceable in Kenya.
Improvements to licensed technology are one of the most commercially significant and frequently disputed provisions in a Kenya Technology Transfer Agreement. The parties have three principal options. First, licensee-owned improvements: improvements developed by the transferee belong exclusively to the transferee, with no grant-back obligation to the transferor. This approach is favoured by licensees and is unlikely to attract CAK scrutiny under the Competition Act No. 12 of 2010. Second, licensor grant-back: the transferee assigns all improvements to the transferor, potentially with a right to a leaseback licence. This approach may be viewed as anti-competitive by the CAK if the grant-back is without fair compensation. Third, joint ownership: improvements are jointly owned, with each party having the right to exploit the jointly owned improvements independently. Under the Industrial Property Act No. 3 of 2001, joint patent ownership in Kenya entitles each co-owner to exploit the patent independently without accounting to the other, which may not reflect the parties' commercial intentions. The Technology Transfer Agreement should state clearly which regime applies, the process for notifying the other party of improvements, and how the costs of prosecuting improvement patents are shared.
The Insolvency Act No. 18 of 2015, administered by the Official Receiver under the supervision of the High Court of Kenya, governs the insolvency of companies and individuals in Kenya. When a transferee company is placed in administration or liquidation under the Insolvency Act, the administrator or liquidator has the power to adopt, disclaim, or assign contracts of the insolvent company. A Technology Transfer Agreement is an executory contract that the insolvency officeholder may adopt — in which case the licensor continues to receive royalties — or disclaim — in which case the agreement terminates. The insolvency of the transferee is a standard event of default in a well-drafted Technology Transfer Agreement, triggering the transferor's right to terminate the licence and require the return or destruction of all technical documentation. To protect against insolvency risk, transferors should consider escrow arrangements for any upfront technical documentation delivered to the transferee, and should register patent licences with KIPI under the Industrial Property Act No. 3 of 2001 so that the licence appears on the public register and is not invalidated by the transferee's insolvency.
A Technology Transfer Agreement in Kenya is subject to stamp duty under the Stamp Duty Act Cap. 480, administered by the Kenya Revenue Authority (KRA). The applicable stamp duty depends on the nature of the instrument. Where the agreement is executed as a licence or service agreement, nominal stamp duty of KES 200 typically applies. Where the agreement involves an absolute assignment of intellectual property rights rather than a licence, the instrument may attract ad valorem stamp duty on the consideration paid. Instruments executed outside Kenya but relating to property or transactions in Kenya are also subject to stamp duty under the Stamp Duty Act. Stamping is conducted at KRA Stamp Duty offices or through the KRA iTax portal. An unstamped instrument is inadmissible as evidence in Kenyan court proceedings under Section 19 of the Stamp Duty Act until the unpaid duty and applicable penalty are paid. Parties should budget for stamp duty costs when structuring the transaction consideration.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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