Ho Chi Minh City, 25 February 2025
Part 1: Overview on Trademark License Agreement under the Vietnam Intellectual Property Law & Regulations
Trademark License Agreement (“TLA”) is considered a relatively effective means for trademark owners to exploit their trademark in various markets, especially in reaching or expanding their business to new ones in association with such trademarks. For a TLA between a foreign licensor and a local licensee, the licensor should be aware of key legal and regulatory considerations under the current law and regulations on intellectual property (“IP Law & Regulations”), along with practical notes to navigate it efficiently.
Trademarks to Be Licensed
Key Considerations:
In general, the proper owner of a trademark, i.e. the licensor, can grant license to the other person, i.e. the licensee, to use the licensor’s trademark under the terms of a TLA. However, licensing trademarks which have not yet been granted protection in Vietnam carries risks, such as: (i) the tax authorities may not recognize payments from the local licensee to the licensor as legitimate business expenses, making it more challenging to enter into the TLA; and (ii) the licensor may be faced with trademark disputes with the local licensee and/or third parties, and it may be inconvenient for both licensor and licensee in performing promotional activities in Vietnam in respect of the licensed trademarks.
Provisions relating to trademark license under the IP Law & Regulations are for only trademarks which have been registered with or granted protection in Vietnam by the Intellectual Property Office of Vietnam (“IP Viet Nam”).
Notes: The proper trademark owners should acquire registration/ protection in Vietnam for their trademarks before granting trademark licenses to the local licensees.
Requirements for Formality and Contents of a TLA
Key Considerations:
A TLA must be in writing and include following material provisions: (i) full names and addresses of the licensor and licensee; (ii) ground of licensing, i.e. protected particulars of the trademark(s) to be licensed; (iii) type of agreement, i.e. exclusive TLA or non-exclusive TLA; (iv) scope of license, including duration, scope of trademark use, and territorial restrictions; (v) license fees/ royalty; and (vi) rights and obligations of parties.
In a TLA, the provisions which are considered unreasonable restrictions on the rights of the licensee, especially, such restrictions unrelated to the licensor’s rights are prohibited, including: (i) directly or indirectly restricting the licensee from exporting goods produced or services provided under TLA to the territories where the licensor neither holds the respective trademarks nor has the exclusive right to import such goods; (ii) 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; and (iii) prohibiting the licensee from complaining about or initiating lawsuits with regard to the validity of the trademarks or the licensor’s right to license.
The duration of a TLA and the scope of trademark license shall fall into the remaining duration of the trademark registration/ protection, and scope of protection of trademark in Vietnam. In certain cases, parties to TLA may desire the duration thereof which is longer than the remaining duration of such trademark registration/ protection.
Notes:
TLA should be carefully reviewed to ensure compliance with mandatory provisions and the exclusion of prohibited clauses, as any non-compliant terms will automatically be deemed invalid.
In case where parties to a TLA desire the duration thereof which is longer than the remaining duration of the trademark registration/ protection in Vietnam, the initial duration thereof should be the same to the remaining duration of the trademark registration/ protection, and an extension TLA shall be made upon the expiration of the initial duration after filing a request for renewal of trademark registration/ protection.
Registration of TLA
Remarkable issues:
The IP Law & Regulations does not require the registration of TLA with the IP Viet Nam, but the TLA is effective as agreed between parties, and effective against third parties without such registration. However, parties have the option to register the TLA with IP Viet Nam.
Tips:
The registration of TLAs with the IP Vietnam is highly recommended to ensure that the TLA does not contain any prohibited contents and/or provisions contrary to the IP Law and Regulations. In addition, such registration will facilitate parties in dealing with disputes and/ or trademark infringements, if any as well as may be helpful for the local licensee in dealing with tax issues in respect of its payables made to the foreign licensor under the TLA.
Ensuring trademark protection, complying with mandatory provisions, and understanding the implications of registration can help mitigate risks and enhance the enforceability of the agreement. By proactively addressing these considerations, licensors can navigate the Vietnamese trademark licensing landscape more effectively and secure a stable business partnership with local licensees.
