Laws Encouraging Technological Innovation in Israel : ⲳStrings AttachedⲴ Heather A. Stone* Ɇ. Introduction ɇ. The Laws Encouraging Technological Innovation in Israel A. Venture Capital B. Tax Incentives C. Capital Markets Ɉ. The R&D Law A. OCS Administration; Technology Administered by Technolo- gists B. Grants and Royalties C. Periodic Reporting D. Transfer of Manufacturing Activities E. Transfer of Technology F. Licensing Arrangements ɉ. Summary and Conclusion * The author is a partner in the Mergers & Acquisitions department, and head of the Intellectual Property practice, of the Tel Aviv, Israel law firm Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co. The information in this article should not be construed as legal advice. Opinions in this article are those of the author and not of the firm. The author wishes to thank Messrs. Aviram Zolti, Uri Gabai and Shlomi Nezry from the OCS, and Shmil Levy from Sequoia Capital and Eyal Kishon from Genesis Partners, for their patience and kind answers to the author's questions. The author also wishes to the thank Mr. Elad Ziv for his assistance in researching this article. Email:
[email protected] Abstract There are numerous laws in Israel that aim to encourage technological inno- vation in industrial research and development. One common feature of nearly all these laws is that they aim to make capital available to entrepreneurs or make the economic return on investment (ROI) for investors more attrac- tive. This is largely due to the fact that capital is the one main ingredient to a successful technology sector that Israel has historically lacked. This article will focus primarily on the Israeli Law for the Encouragement of Industrial Research and Development, 1984 (the “R&D Law”), as amended, and the regulations promulgated thereunder.