The Israeli Innovation Authority (IIA), formerly known as the OCS, has published important new rules for multinational corporations regarding licensing of knowhow that was developed with IIA funding.

The new rules enable Israeli and non-Israeli multinational corporations to license their IIA-funded knowhow within their group entities outside of Israel (“MNC Group License”), subject to IIA approval with lower payments to the IIA compared to the standard IIA license fees that apply to other licensing of IIA-funded knowhow outside of Israel.

The new rules are meant to incentivize foreign corporations that acquire or invest in IIA-funded companies to maintain the technology of the Israeli companies in Israel, while being able to share the technology globally, within the group, at a reasonable cost and in a simplified manner. The new rules are also meant to make IIA funding a realistic and attractive opportunity for multinational corporations, in particular for the development of high-risk future technologies.

The new rules affect mergers and acquisitions, investments and commercial transactions which involve multinational corporations and IIA-funded companies or companies that hold IIA-funded know-how. The new rules also provide an opportunity for IIA-funded companies to reexamine the structure of their operations in order to share their know-how with non-Israeli group companies.

It is therefore highly recommended to consider the implications of the new rules, both regarding future transactions as well as regarding restructuring possibilities of on-going operations of IIA-funded multinational corporations.