We are aware that businesses with recognized brands frequently encounter opportunities to extract additional value from their trademarks by granting permission, or license to third parties to use the marks. In such regard, it is critical to formalize this arrangement in a well-thought-out trademark license that includes measures to prevent damage to your brand name and maximize the financial benefits you will derive from this arrangement. Any license agreement will include provisions that clearly identify the trademark, regions where it can be used, whether the license is exclusive, and specify royalty payments the licensee will pay to the licensor.
We have significant expertise negotiating and preparing trademark license agreements for a wide variety of businesses. Our trademark attorneys strive to ensure that the products sold by a licensee adhere to the highest standards by securing your right to exercise quality control in order to protect your brand and reputation. Our trademark attorneys will also advise you on specific trademark licensing requirements, infringement risks and enforcement privileges. In addition, our attorneys regularly represent licensors and licensees in international and domestic transactions involving software, patent, trademark, copyright and trade secret licenses. We routinely negotiate a broad range of commercial contracts. We also represents clients in negotiating system integration agreements and value added reseller, distribution and original equipment manufacturing agreements.
Per Article 148.2 of IP Law 2005 “an industrial property object license agreement shall be valid as agreed upon by the parties involved but shall be legally effective as against a third party upon registration with the State administrative body for industrial property rights”.
Accordingly, license agreement takes effect as so agreed by the parties, however, to be effective against any third parties, such license agreement should be registered with the IP Vietnam. The definition of a “third party” in this context is vague and could therefore be subject to differing interpretations. However, generally, it is agreed that a third party is a party other than the signatory parties, which can include banks, tax authorities, the Vietnam IP Office, courts and other competent authorities. Accordingly, licenses which are not registered with the Vietnam IP Office, would not bind such third parties.
2. Whether a trademark license is effective when the recordal of license is completed before the Vietnam IP Office?
In light of the said provision, it may be interpreted that a trademark license is effective when a trademark owner (Licensor) grants permission to another (Licensee) to use that trademark on mutually agreed terms and conditions. However, it is somehow controversial with the latter part of Article 148.2, which reads as "but [the IP license agreement] shall be legally effective as against a third party upon registration with the State administrative body for industrial property rights." Since no further guidance or regulation in this issue is available, we strongly recommend IP license agreements to be recorded with the IP Vietnam as to avoid a risk of not being recognized by any third party.
3. Whether recordal of trademark license is required to enforce its rights in Vietnam?
Per Article 148.2 of the IP Law 2005 “an industrial property object license agreement shall be valid as agreed upon by the parties involved but shall be legally effective as against a third party upon registration with the State administrative body for industrial property rights”.
In light of Article 148.2, the IP Law 2005, license agreement takes effect as so agreed by the parties, however, to be effective against any third parties, such license agreement should be registered with the IP Vietnam. Accordingly, licenses which are not registered with the IP Vietnam would not bind such third parties. As a result, to enforce its right, the trademark license should be recorded with the IP Vietnam.
4. Is recordal of license obligatory in Vietnam? If so, please indicate possible disadvantages of not recording the trademark license.
Under Article 148.2 of IP Law 2005 that “an industrial property object license agreement shall be valid as agreed upon by the parties involved but shall be legally effective as against a third party upon registration with the State administrative body for industrial property rights”.
In light of In light of Article 148.2, the IP Law 2005, recordal IP license agreement with the Vietnam IP Office is highly recommended though not compulsory. We think that one advantage of not recording the trademark license is that if the license is not recorded, there may be a downside risk that such a license is not recognized by a third party.
5. Does Licensee have personal jurisdiction to take actions upon detecting IPR infringement in Vietnam?
Per Article 203.2c, the IP Law 2005: "The plaintiff must prove that the plaintiff is the intellectual property right holder by leading one of the following forms of evidence: [...] 2c. Copy of the license contract for an intellectual property object where the use right is licensed pursuant to a contract." In light of Article 203.2c, the IP Law 2005, the licensee has personal jurisdictions to take action. However, kindly note that the personal jurisdiction of the Licensee is restricted by scope of rights/ permission granted to such a Licensee under the license agreement. In the other words, in case the license agreement does not grant the Licensee with an authorization to take action on behalf of the Licensor, no action in enforcement can be taken by the Licensee.
6. Is recordal of license mandatory or arbitrary under the laws of Vietnam?
Article 148.2, the IP Law 2005: "[...] an IP licence contract shall be valid as so agreed upon by the parties, but shall be legally effective as against a third party upon registration with the State administrative body for industrial property rights." Thus, registration of IP license agreement with the Vietnam IP Office is highly recommended though not compulsory.
7. Whether any penalty for not recording a trademark license in Vietnam?
The IP Law of Vietnam does not contain legislation on imposing a penalty on the licensee or licensor for not recording a trademark license.
8. Is evidence of use by a subsidiary (with capital involvement) without recordal of trademark license sufficient to overcome a non-use cancellation in Vietnam?
Article 148.2, the IP Law 2005: "[...] an IP licence contract shall be valid as so agreed upon by the parties, but shall be legally effective as against a third party upon registration with the State administrative body for industrial property rights.". Article 95.1d, the IP Law 2005: [A trademark registration shall be cancelled at request of a third party if] The mark has not been used by its owner or the licensee of the owner without justifiable reason for five (5) consecutive years prior to a request for cancellation, except where use is commenced or resumed at least three (3) months before the request for cancellation."
In our opinions, use of trademark by the licensee under a lawful license agreement is legitimate, even if the license is not recorded. Hence, evidence of use by a subsidiary (with or without capital involvement) without recordal of trademark license may be sufficient to overcome a non-use cancellation. However, in light of Article 148.2, the IP Law 2005, we opine that the evidence of use would be much stronger if the license is recorded.
9. Is evidence of use by a subsidiary (with no capital involvement) without recordal of trademark license sufficient to overcome a non-use cancellation in Vietnam?
Article 148.2, the IP Law 2005: "[...] an IP license contract shall be valid as so agreed upon by the parties, but shall be legally effective as against a third party upon registration with the State administrative body for industrial property rights.". Article 95.1d, the IP Law 2005: [A trademark registration shall be cancelled at request of a third party if] The mark has not been used by its owner or the licensee of the owner without justifiable reason for five (5) consecutive years prior to a request for cancellation, except where use is commenced or resumed at least three (3) months before the request for cancellation."
It is controversial to affirm whether evidence of use by a subsidiary (with no capital involvement) without recordal of trademark license sufficient to overcome a non-use cancellation. However, in our opinions, use of trademark by the licensee under a lawful license agreement is legitimate, even if the license is not recorded. Hence, evidence of use by a subsidiary (even with or without capital involvement) without recordal of trademark license may be sufficient to overcome a non-use cancellation. Despite the aforesaid, in light of Article 148.2, the IP Law 2005, we hope that the evidence of use would be much stronger if the license is recorded.
10. The 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”) officially came into force on December 30, 2018. The trade deal was signed by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam in Santiago in March 2018. The CPTPP took effect in Vietnam on 14 January 2019. Could you please advise if the CPTPP has any effects on the current IP Law of Vietnam, particularly on recordal of trademark licensing in Vietnam?
Yes, per Article 18.27 of the CPTPP which provides for “Non-Recordal of a Licence”: [No Party shall require recordal of trademark licences:(a) to establish the validity of the licence; or (b) as a condition for use of a trademark by a licensee to be deemed to constitute use by the holder in a proceeding that relates to the acquisition, maintenance or enforcement of trademarks.]
Per Notification No. 1926/TB-SHTT dated 01 February 2019, issued by the IP Office of Vietnam, as from the effective date the CPTPP, all trademark licenses shall be valid for third parties regardless of their registration with the IP Vietnam (rather than as under Article 148.2 of the IP Law).
The use of a trademark by a licensee under a license as stipulated in Article 124.5 of the IP Law shall be regarded as the use of the trademark by the owner in the procedures for acquisition, maintenance and enforcement of trademarks, regardless of the registration thereof with the IP Office of Vietnam.
