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Nevertheless, it is noted in paragraph 15 of the UN Commentary on Article 12 that “some countries tend to regard the provision of brain-work and technical services as the provision of ‘information concerning industrial, commercial or scientific experience’ and to regard payment for it as royalties”. Paragraph 17 of that Commentary goes on to say that

“Some members from developing countries interpreted the phrase ‘information concerning industrial, commercial or scientific experience’ to mean specialized knowledge, having intrinsic property value relating to industrial, commercial, or managerial processes, conveyed in the form of instructions, advice, teaching or formulas, plans or models, permitting the use or application of experience gathered on a particular subject.”

No branch reporters stated that this latter interpretation would be followed in their jurisdiction. Nevertheless, some treaties seek to address the uncertainty by clarifying the position explicitly. Brazil, for example, has clarified in protocol provisions to a number of treaties that royalties include payments for the provision of technical services and technical assistance. On the other hand, France, Mexico and the Netherlands have included a provision in some of their treaties clarifying that remuneration paid for technical services, or for consultation or supervisory services, is not remuneration paid for information concerning industrial, commercial or scientific experience.

Payments for software in particular seem to raise issues, with a number of countries treating certain such payments as royalties. For example, Mexico treats software payments as royalties except where the software is not customised to the customers’ needs and reproduction is not permitted.

 

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