In general, license of industrial property rights (IPRs) is realized to be one of effective methods for the owner (licensor) to exploit such rights as well as for the licensee to develop his business owing to the advantages of the objects to be licensed. It is also a tool for developing countries like Vietnam to receive technology and management skills.
IPR licensing has been increased and more popular in Vietnam, given the increased FDI inflows to the country and market opening to foreign companies. Local business community is also more and more familiar with franchising arrangements which are normally associated with IPR licensing. According to the Vietnam National Office of Intellectual Property (NOIP), the number of IP objects to be licensed in during 2004 and 2005 is more than 400 per year. And the respective number in 2006 and 2007 is more than 500 and 1,100.
IPR Licensing in Vietnam is governed by the following main legal documents:
(1) Civil Code passed on 14 June 2005, effective from 01 January 2006;
(2) Law on Intellectual Property dated 29 November 2005, effective from 01 July 2006 (LIP);
(3) Decree 103/2006/ND-CP of the Government dated 22 September 2006, guiding the implementation of the LIP, effective from October 2006 (Decree 103); and
(4) Circular 01/2007/TT-BKHCN of the Ministry of Science and Technology (MOST) dated 14 February 2007, providing guidelines for implementation of Decree 103, effective from March 2007.
As stipulated, there are certain restrictions in respect of IPRs to be licensed:
(i) IPRs for a geographical indication or a trade name shall not be licensed.
(ii) IPRs for a collective mark shall not be licensed to organizations or individuals other than the members of the collective mark owner.
The license of IPRs may be exclusive or non- exclusive, and must be made in the form of a written contract. The licensing contract shall, in general, comprise of the following material provisions:
(i) Identities of the parties (licensor and licensee);
(ii) Bases of the license (e.g. title granted or master-license received);
(iii) Type of the license;
(iv) Scope of the license;
(v) Term of license;
(vi) Price for the license / licensing fees; and
(vii) Rights and obligations of the parties.
In addition, for the trademark licensing contract, it is mandatory for the licensee to indicate on respective goods and packaging thereof that the goods have been produced under a trademark license. And for exclusive patent licensing contract, the licensee is required to use the invention in the same manner as the patent holder in accordance with the applicable laws. Furthermore, if without the authorization or consent of the licensor, the licensee may not grant sub-license to any third party.
The licensing contract may not contain such provisions that (1) prohibit the license to improve the industrial property object other than marks, and compel the licensee to assign to the licensor the right for registration or grant a free license to the licensor the IPRs in respect of such improvements; (2) directly or indirectly restrict the licensee to export goods produced or services supplied under the licensing contract for use of industrial property object to the territories where the licensor neither hold the respective IPRs nor has the exclusive right to import such goods; and (3) compel the licensee to buy all or a given percentage of materials, components or equipments from the licensor or the persons designated by the licensor without aiming at ensuring the quality of goods produced or services supplied under the licensee; and (4) prohibiting the licensee from causes of validity of the industrial property right or of the right for licensing of the licensor.
For recordal of license, the current rules provides that a licensing contract shall be effective as agreed by the parties but shall only be effective to a third party upon recordal with the NOIP. Any amendment of, extension or early termination of validity of a registered contract shall be recorded at the NOIP. Validity of a licensing contract shall be terminated ex-officio upon the termination of the licensor's respective IPRs.
For the patent right, the LIP provides that a compulsory license of patent right may be granted under the decision of a state competent authority in conditional cases. A compulsory license of patent right shall be non-exclusive and be limited to such a scope and period sufficient to attain the aim of the compulsory licensing. The licensee shall not either assign licensed rights, except with the assignment of his or her business premise, nor grant a sub-license to others, and the licensee shall pay the owner of IP right an adequate remuneration which is determined on the basis of the economic value of licensed right, and shall not exceed 5% of the net selling price of products manufactured under the invention. The proper amount of compensation may be determined by relevant evaluation organization
In general, the MOST is the state competent authority responsible for granting compulsory license. In case of compulsory license for invention relating to healthcare and nutrition of human, the Ministry of Health and the Ministry of Agriculture and Rural Development shall cooperate with the MOST in this matter.
By Dang The Duc, Managing Partner
& Nguyen Thi Hong Anh, Head of IP & Technology Group
Indochine Counsel
Unit 4A2, 4th Floor, Han Nam Office Bldg.
65 Nguyen Du, District 1
Ho Chi Minh City, Vietnam
(Tel) +848 823 9640
(Fax) +848 823 9641
duc.dang@indochinecounsel.com
www.indochinecounsel.com