Want to learn more about drafting, negotiating, and understanding intellectual property and technology contracts and have 10 minutes to spare? Grab your morning coffee or afternoon tea and dig into our Tech Contract Quick Bytes—small servings of technical contract insights expertly prepared by our seasoned attorneys. This month's article focuses on the current international landscape for technology agreements.
As global markets continue to evolve in 2025's fast-moving environment, the negotiation of international technology and license agreements faces an increasingly complex landscape. The resurgence of geopolitical tensions, rapid regulatory developments in data and IP, and shifting trade policies—such as new trade tariffs—are reshaping the legal and commercial dynamics of cross-border agreements. As you navigate 2025, we recommend embedding foresight and flexibility into contractual structures to manage risk and preserve value.
This article outlines ten key international issues to consider in technology and license agreements this year, with some initial practical guidance on how to address each in the agreement.
1. Tariff Exposure
Issue: New broad-based tariffs on imports may significantly impact cross-border technology transactions, particularly for hardware and embedded software.
Recommendation: Include tariff adjustment clauses to allocate risk and permit renegotiation or price adjustments if tariffs materially affect costs. Also consider force majeure or material adverse change clauses tailored to tariff impacts.
2. Data Localization and Cross-Border Data Transfer Laws
Issue: Jurisdictions continue to expand regulations requiring data to be stored or processed locally, restricting cross-border transfers.
Recommendation: Address data residency requirements explicitly, identifying where data will be stored and how transfers will occur. Include compliance representations and termination rights if laws make performance unlawful or impracticable.
3. Export Control and Sanctions Compliance
Issue: The U.S., EU, and other jurisdictions maintain export controls on certain technologies, particularly those related to AI, encryption, and semiconductors. Sanctions regimes remain fluid and politically sensitive.
Recommendation: Require both parties to represent and warrant compliance with applicable export controls and sanctions. Include audit rights and termination rights and consider including a detailed compliance policy schedule as an exhibit.
4. Divergent IP Ownership and Inventorship Standards
Issue: Standards for assigning and registering IP rights may differ by jurisdiction. For example, some countries require employee inventions to be compensated or automatically vest in the employer.
Recommendation: Use governing law clauses with care, and clearly define IP ownership in the agreement. Include assignment obligations, recordation assistance provisions, and employment agreement harmonization clauses if applicable.
5. Regulatory Approvals and Antitrust Filings
Issue: Cross-border licensing, especially exclusive arrangements or joint R&D, may trigger foreign investment review or antitrust filings in multiple jurisdictions.
Recommendation: Allocate responsibility for filings, establish cooperation obligations, and include conditions precedent for regulatory clearance.
6. Dispute Resolution and Enforcement Across Borders
Issue: Enforcing IP or contract rights internationally remains costly and uncertain. Jurisdictional challenges and enforcement of judgments or arbitral awards must be proactively managed.
Recommendation: Consider opting for international arbitration in a neutral venue (e.g., ICC, SIAC) with an enforceable choice of law and forum clause.
7. Currency Fluctuation and Payment Risk
Issue: Exchange rate volatility, especially with ongoing monetary policy shifts and inflation, can impact the economics of long-term license or royalty agreements.
Recommendation: Specify the currency of payment and include exchange rate adjustment mechanisms.
8. Localization of Technology and Tax Structuring
Issue: Some countries require local sourcing or transfer of technology, or impose tax penalties for offshore IP ownership and royalty payments.
Recommendation: Involve tax and transfer pricing specialists early.
9. Cybersecurity and Compliance with Sectoral Laws
Issue: Many countries impose technology-specific compliance mandates, especially in fintech, health tech, and telecommunications, requiring certifications or audits.
Recommendation: Include security compliance obligations, right to periodic assessments, and remedies for security breaches. Reference applicable technical standards (e.g., ISO, NIST) and require incident notification obligations.
10. Sustainability and ESG-Driven Contracting Requirements
Issue: Environmental, Social & Governance (ESG) regulations and expectations now influence how global companies contract, with increasing focus on sustainability, human rights, and responsible sourcing.
Recommendation: Add ESG compliance representations and clauses mandating supply chain transparency, especially for software or hardware components sourced internationally. Include rights to terminate or suspend if ESG violations arise.
By anticipating regulatory changes, geopolitical developments like tariffs, and jurisdictional differences, you can proactively structure agreements that balance commercial goals with compliance and flexibility.
If you or your company would like to discuss international measures for your technology contracts, please contact A.J. Zottola.