Trademark Licensing in Vietnam
1. Please advise us if 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 under the laws of Vietnam?
KENFOX:
Yes, under the laws of Vietnam, a trademark license becomes legally effective between the Licensor and the Licensee once they have mutually agreed on the terms and conditions of use.
Under Article 148.2 of Vietnam’s IP Law, “As for industrial property rights granted on the basis of registration specified in Point a, Clause 3, Article 6 of this Law, industrial property rights agreements shall come into force according to the agreement between the parties”. Article 148.3 provides that “3. Industrial property rights agreements specified in Clause 2 of this Article, except for trademark use agreements, shall be registered with an industrial property rights authority to be valid for third parties”.
This means that a trademark license agreement takes legal effect between the parties upon execution, without requiring registration with the Intellectual Property Office of Vietnam (IPVN).
However, registration is recommended for enforcement purposes:
While recordal is not mandatory for the license to be effective between the parties, if the Licensee wishes to:
- Enforce the trademark rights against third parties;
- Participate in legal or administrative proceedings (e.g., customs seizure, anti-counterfeiting actions);
- Be officially recognized as an authorized user, then the trademark license should be registered with the IPVN.
2. Whether a trademark license is effective when the recordal of license is completed before the Vietnam IP Office?
According to the Vietnam IP Law:
- A trademark license agreement, as an industrial property rights agreement, comes into force according to the agreement between the parties (Article 148.2)
- Article 148.3 clarifies the requirement for registration (recordal) for validity against third parties. It states that industrial property rights agreements specified in Clause 2 of Article 148, except for trademark use agreements, shall be registered with an industrial property rights authority to be valid for third parties.
Therefore, a trademark license is effective based on the agreement between the licensor and licensee. The recordal of the license with the IP Office of Vietnam is not a condition for the effectiveness of the trademark license itself between the parties, nor is it legally required for the license to be valid against third parties. The license is effective when the parties agree to its terms.
However, recordal of a trademark license agreement with the IPVN gives the license legal effect against third parties, including:
- Infringers;
- Customs authorities;
- Enforcement agencies;
- Other third-party challengers.
3. Whether recordal of trademark license is required to enforce its rights in Vietnam?
Under the Intellectual Property Law of Vietnam, the recordal of a trademark license agreement is not a mandatory prerequisite for the enforcement of rights derived from that license. This conclusion is based on the following analysis of Article 148:
- Effectiveness of the License Agreement: Article 148.2 stipulates that for industrial property rights established by registration (which includes trademarks), an industrial property rights agreement (such as a trademark license) “shall come into force according to the agreement between the parties“. This means the license agreement is effective and binding between the licensor and licensee from the moment they agree to its terms, irrespective of recordal.
- Validity Against Third Parties: Article 148.3 addresses the validity of such agreements with respect to third parties. It states “Industrial property rights agreements specified in Clause 2 of this Article, except for trademark use agreements, shall be registered with an industrial property rights authority to be valid for third parties“.
The crucial part of this clause is the explicit exception: “except for trademark use agreements.” This provision signifies that, unlike other types of industrial property license agreements, trademark license agreements do not require registration (recordal) with the IP Office of Vietnam to be legally valid against third parties.
Conclusion on Enforcement: Since a trademark license agreement is effective between the contracting parties upon their agreement (Article 148.2) and, critically, does not require recordal to be valid against third parties (Article 148.3), the absence of recordal does not legally impair the ability to enforce rights related to the trademark license. Enforcement actions, whether by the licensor or a licensee (as permitted by the license agreement and relevant procedural laws), can proceed based on the valid and effective license agreement itself.
Under the amended IP Law of 2019, it is not mandatory to record a trademark license with the IP Office of Vietnam for it to be valid or enforceable against third parties. However, recordal remains advisable in practice to facilitate enforcement and establish clear evidence of the licensee’s rights before enforcement bodies such as Customs, Market Surveillance, or courts.
4. Is recordal of license obligatory in Vietnam? If so, please indicate possible disadvantages of not recording the trademark license.
4.1. Is recordal of a license obligatory in Vietnam?
The obligation for recording (registering) a license depends on the type of intellectual property right involved:
- For most industrial property licenses (e.g., patents, industrial designs): Yes, recordal is obligatory for the license agreement to be legally valid against third parties. Article 148.3 states that industrial property rights agreements (as referred to in Article 148.2), “shall be registered with an industrial property rights authority to be valid for third parties“.
- For trademark licenses: No, recordal is not obligatory. Article 148.3 explicitly creates an exception for “trademark use agreements” from the requirement of registration for establishing validity against third parties. A trademark license agreement becomes effective between the contracting parties according to their mutual agreement (Article 148.2).
4.2. Possible disadvantages of not recording a trademark license?
Although the IP Law explicitly exempts trademark license agreements from the requirement of recordal for validity against third parties, meaning the primary legal disadvantage of non-recordal (lack of third-party validity) does not apply, there can still be potential practical disadvantages:
- Evidentiary challenges: Although the unrecorded trademark license agreement is effective between the parties and valid against third parties, in the event of a dispute or when dealing with administrative authorities (such as customs or market surveillance), an officially recorded license can serve as stronger, more convenient, and readily verifiable proof of the licensee’s rights and the scope of the license. The contract itself is a key piece of evidence in legal proceedings, but recordal can supplement this.
- Public notice and deterrence: Recordal provides a degree of public notice regarding the licensee’s legitimate rights to use the trademark. This can be beneficial in deterring potential infringers or clarifying the licensee’s status to other third parties conducting due diligence.
- Streamlining administrative procedures: In certain administrative interactions, such as customs procedures for the control of IP-related goods or during market enforcement actions, presenting an officially recorded license might expedite processes or be viewed more favorably by officials, even if not strictly a legal necessity for the license’s validity.
- Franchising considerations: If the trademark license forms part of a broader franchise agreement, other specific laws or regulations pertaining to franchising (which are not detailed in the provided IP Law text) might have their own notification or registration requirements that could involve the trademark license. Non-compliance with such distinct requirements could lead to disadvantages under those specific regulatory frameworks.
Recordal is not legally obligatory under Vietnam’s current IP law. However, for enforcement and legal clarity, it is strongly recommended to record the trademark license with the IPVN.
5. Does Licensee have personal jurisdiction to take actions upon detecting IPR infringement in Vietnam?
Under the Vietnam IP Law, a licensee’s capacity to take action upon detecting IPR infringement depends on the nature of the action and specific circumstances:
- Requesting competent state authorities to handle the infringement: Yes, a licensee can take this action. Article 198.2 of the IP Law states that “Organizations and individuals that suffer damage caused by acts of infringing upon intellectual property rights… may request competent state agencies to handle such acts…”. A licensee who suffers damage due to infringement would fall into this category.
- Applying self-protection measures (e.g., requesting termination of infringement, apologies, damages; initiating lawsuits): The primary right to apply these measures, including initiating lawsuits, belongs to IPR holder. An IPR holder is defined as an owner of IP rights or an organization or individual to whom IP rights are assigned by the owner. A typical license grants the right to use the IP, not an assignment of the ownership itself.
However, a licensee can still take these broader actions, including initiating lawsuits, under certain conditions:
- Authorization by the IPR holder: Article 198.1a explicitly states that “Intellectual property rights holders may authorize other organizations or individuals to apply the measures specified in Clause 1 of this Article in order to protect their intellectual property rights“. Therefore, a licensee can take such actions if specifically authorized by the IP owner (licensor).
- Terms of the License Agreement: The license agreement itself may contractually grant the licensee the right to take specific enforcement actions, which would align with the principle of authorization.
Specific provision for Plant Variety Licensees: It’s noteworthy that for plant varieties, Article 193.2.c grants a licensee the right “To take necessary measures to prevent a third party’s infringements if, within a time-limit of three months from the date of receipt of the request stipulated in sub-clause (b) above [requesting the licensor to act], the licensor fails to act as requested“. This provides a more direct route for plant variety licensees to act if the licensor is unresponsive. Such a specific default provision is not explicitly mirrored for all other types of IP rights in the general enforcement sections, making authorization by the IPR holder (as per Article 198.1a) or specific contractual rights more central for licensees of other IP like patents or trademarks when it comes to initiating lawsuits independently.
In summary, a licensee can request competent state authorities to handle IPR infringement if they suffer damage.
For more direct enforcement actions such as initiating lawsuits or demanding damages directly from the infringer, a licensee generally needs to be authorized by the intellectual property rights holder or have such rights contractually conferred in the license agreement. The exception is the more specific statutory right granted to plant variety licensees under certain conditions.
6. Is recordal of license mandatory or arbitrary under the laws of Vietnam?
Under the IP of Vietnam, whether the recordal of a license is mandatory or optional (arbitrary) depends on the type of IP being licensed.
- For Trademark Licenses: Recordal is not mandatory. A trademark license agreement becomes effective and binding between the licensor and licensee based on their mutual agreement. Crucially, Article 148.3 explicitly exempts “trademark use agreements” from the requirement of registration (recordal) with the industrial property rights authority to be valid against third parties. Therefore, for trademark licenses, recordal is optional for the purposes of effectiveness between the parties and for validity against third parties.
- For Other Industrial Property Licenses (e.g., patents, industrial designs): Recordal is mandatory for the license to be legally valid against third parties.These license agreements also come into force between the contracting parties according to their agreement. However, Article 148.3 stipulates that these industrial property rights agreements (excluding trademark use agreements) “shall be registered with an industrial property rights authority to be valid for third parties“. Thus, while the license is effective between the licensor and licensee upon agreement, failing to record it means it will not have legal validity concerning third parties. In this sense, recordal is mandatory if the parties wish to ensure the license’s enforceability and recognition against unrelated entities.
In summary, recordal of a trademark license is not mandatory (arbitrary/optional) for its effectiveness between parties or its validity against third parties. Recordal of other industrial property licenses (such as for patents or industrial designs) is mandatory if the parties intend for the license to be valid against third parties.
7. Whether any penalty for not recording a trademark license in Vietnam?
The law does not explicitly state or stipulate any direct penalties (such as fines or administrative sanctions) specifically for the act of not recording a trademark license agreement.
This is consistent with the following provisions:
- A trademark license agreement becomes effective between the contracting parties based on their mutual agreement, not recordal.
- Crucially, Article 148.3 specifies that industrial property rights agreements, except for trademark use agreements, must be registered with the IP Office of Vietnam to be valid for third parties.
Since the recordal of a trademark license is explicitly exempted from the requirement for establishing third-party validity, the law does not impose a penalty for failing to do something it does not mandate for this purpose. The primary consequence of not recording other types of industrial property licenses (like patents or industrial designs) is the lack of validity against third parties, which itself is a significant legal disadvantage rather than a penalty in the form of a fine for the act of non-recordal. For trademark licenses, even this consequence of non-recordal (lack of third-party validity) is removed by the exception.
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?
Under Vietnamese IP Law, evidence of use by a subsidiary (with capital involvement from the trademark owner) should generally be considered sufficient to overcome a non-use cancellation action, even if the trademark license is not recorded. Here’s the reasoning based on the provided legal text:
1. Use by a permitted party is recognized: Article 95.1.d states that a trademark’s validity can be terminated if “The mark has not been used by its owner or his/her licensee without justifiable reasons for five consecutive years…”. This explicitly allows for use by a person permitted by the owner, which includes a licensee.
2. Use by licensee constitutes use by owner: Article 136.2 further clarifies this by stating, “Trademark holders shall use trademark continuously. Trademark use under a trademark use agreement by a transferee [licensee] is also considered an act of using the holder’s trademark”.
3. Recordal of trademark License is Not mandatory for validity: Article 148.3 makes it clear that “Industrial property rights agreements specified in Clause 2 of this Article, except for trademark use agreements, shall be registered with an industrial property rights authority to be valid for third parties“. This means a trademark license agreement is valid and effective between the parties (the trademark owner and the subsidiary) and can have effect against third parties without being recorded.
Given that use by a licensee is considered use by the trademark owner, and a trademark license agreement does not require recordal to be valid, use of the trademark by the subsidiary would be considered use by the trademark owner.
Therefore, if the subsidiary is using the trademark with the permission of the parent company (trademark owner), which can be established through a license agreement (even if unrecorded), such use should be sufficient evidence to overcome a non-use cancellation action. The capital involvement between the parent company and the subsidiary would further support the argument that the use is with the owner’s permission and control. The key is to be able to prove that the use by the subsidiary was authorized by the trademark owner.
9. 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?
KENFOX: 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.
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