California Technology Transfer Agreement

In the case of a transaction involving, for example, equipment, hardware, written instructions, a copy of the computer software that operates the equipment and hardware and the right to copy that software to the hard drive of the equipment to use the software for the operation of the equipment, equipment, hardware and written instructions are considered physical personal property and are subject to tax. While the California Board of Equalization attempted to assert that copying computer software is also personal property, the CA Court of Appeals ruled in the 2011 Nortel Networks Inc. vs. State Board of Equalization case that the medium into which the copyright or patent is transferred was not essential or physically useful for the subsequent use of that intangible property. Even if ownership is transferred to a material medium as long as it is transferred or licensed and is subject to copyright or patent, it is considered TTA. Example #2: Company X holds patents for widgets and the manufacturing process of those widgets. Company X transfers in writing (temporarily or otherwise) its patent interests in the sale of widgets and the process of making such widgets to Company Y. The transfer of its patent shares by Company X to Company Y constitutes a technology transfer agreement. The sale or storage, use or consumption of widgets produced by Company Y does not constitute a technology transfer agreement. The sale or storage, use or consumption of personal material items used for the manufacture of widgets by Company Y also does not constitute a technology transfer agreement.

However, in recent times, the SBE has gone too far – it has tried to collect taxes on transactions that are clearly exempt under current legislation. Their objective: to transfer intangible goods … . .