License contract in Vietnam

License contract in Vietnam. In the current globalization and international economic integration, intellectual property has become an important factor in production and business activities, determining the competitiveness of a corporation in the market. Objects of industrial property rights are assets, so they can also be bought, sold and licensed on the market. Licensing of industrial property rights is done through a license contract. So, what is a license contract and how to draft a license contract in accordance with Vietnamese law?

What is a license contract under Vietnamese law?

The owner of an industrial property right has the exclusive right to use that industrial property right during the term of protection and in the country or territory of registration. Other organizations and individuals who want to use these industrial property rights during the term of protection must obtain permission from the owner. This permission is expressed in the form of a written contract called a license contract.

Thus, a license contract is a contract to license the right to use an object of industrial property right, whereby an organization or individual has the exclusive right to use an object of industrial property right (licensor) allows another organization or individual (licensee) to use that industrial property right.

Features of the license contract under Vietnamese law

1/ The licensor is the owner of the industrial property right being protected in Vietnam.

2/ The object of a license contract is one of the objects of industrial property rights, including: inventions, utility solutions, industrial designs, design of semi-conducting closed circuits, trademarks, trade secrets.

3/ The owner of an industrial property right only licenses the right to use, not the ownership of that industrial property right.

4/ The license contract is limited by the country or territory where the industrial property right is registered and for the term of the protection.

Types of License Contracts under Vietnamese law

License contracts include the following types:

1/ Exclusive license contract

Exclusive contract means a contract under which, within the licensing scope and term, the licensee shall have the exclusive right to use the licensed industrial property object while the licensor may neither enter into any industrial property object licence contract with any third party nor, without permission from the licensee, use such industrial property object.

2/ Non-exclusive license contract

Non-exclusive contract means a contract under which, within the licensing scope and term, the licensor shall still have the right to use the industrial property object and to enter into a non-exclusive industrial property object licence contract with others.

3/ Sub-licence contract

Industrial property object sub-licence contract means a contract under which the licensor is a licensee of the right to use such industrial property object pursuant to another contract.

Terms of the license contract under Vietnamese law

An industrial property object licence contract must contain the following principal contents:

– Full names and addresses of the licensor and of the licensee;

– Grounds for licensing;

– Contract type;

– Licensing scope including limitations on use right and territorial limitations;

– Contract term;

– Licensing price;

– Rights and obligations of the licensor and of the licensee.

– Agreement on force majeure events and handling direction in such events.

– Agreement on being late in paying the lisence fee.

– Agreement on penalties for breach of contract.

– Agreement on cases in which one party can unilaterally terminate the performance of the contract.

– Agreement on contract termination cases.

– Agreement on compensation for damage.

– Agreement on the contract law, the contract language and the dispute settlement.

An industrial property object licence contract must not have provisions which unreasonably restrict the right of the licensee, and in particular the following provisions which do not derive from the rights of the licensor:

– Prohibiting the licensee from improving the industrial property object other than marks; compelling the licensee to transfer free of charge to the licensor improvements of the industrial property object made by the licensee or the right of industrial property registration or industrial property rights to such improvements;

– Directly or indirectly restricting the licensee from exporting goods produced or services provided under the industrial property object licence contract to the territories where the licensor neither holds the respective industrial property right nor has the exclusive right to import such goods;

– Compelling the licensee to buy all or a certain percentage of raw materials, components or equipment from the licensor or a third party designated by the licensor not for the purpose of ensuring the quality of goods produced or services provided by the licensee;

– Prohibiting the licensee from complaining about or initiating lawsuits with regard to the validity of the industrial property rights or the licensor’s right to license. Any clauses in a contract falling into the above cases shall be automatically invalid.