California has defined a technology transfer agreement as a legally binding contract that gives a third-party permission to manufacture and sell products that are otherwise protected under a copyright or patent the seller maintains. All revenue received for tangible personal property transferred in connection with a technology transfer agreement is taxable. Amounts allocated for revenue received for tangible personal property must be valued at fair market value. Revenue received specifically for rights granted for use of a patent or copyright are not taxable. (California Regulation, Reg. 1507.)